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HSBC Continental Europe
Universal registration document and Annual Financial Report 2025

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
1

The universal registration document has been filed on 25 February 2026 with the AMF as competent authority under Regulation (EU) 2017/1129
without prior approval pursuant to Article 9 of that Regulation.
The universal registration document may be used for the purposes of an offer to the public of securities or the admission of securities to trading
on a regulated market if supplemented by a securities note and, where applicable, a summary and any amendments to the universal registration
document. These documents are subject to approval by the AMF in accordance with Regulation (EU) n°2017/1129.

Contents
| Strategic Report
3 | Key financial metrics
4 | Presentation of activities and strategy
10 | Consolidated Results
17 | Other information
18 | Corporate Governance report
44 | Statutory Auditors‘ special report on related-party agreements
| Sustainability statement
66 | Environmental
83 | Social
93 | Governance
99 | Report on the certification of sustainability information and verification of the disclosure requirements under article 8 of Regulation (EU) 2020/852
| Risk
124 | Approach to managing risk
127 | Key developments and risk profile
128 | Risk factors
| Consolidated financial statements
190 | Consolidated financial statements
198 | Notes on the consolidated financial statements
258 | Statutory Auditors’ report on the consolidated financial statements
| Parent company financial statements
262 | Parent company financial statements
267 | Notes on the parent company financial statements
288 | Statutory Auditors‘ report on the financial statements
| Additional information
294 | HSBC Continental Europe’s principal subsidiaries and investment policy
298 | Proposed resolutions to the Combined General Meeting to be held on 27 March 2026
300 | Information on HSBC Continental Europe and its share capital
303 | Persons responsible for the Universal Registration Document and for auditing the financial statements
305 | Cross-reference table
307 | Network of offices

Cautionary statement regarding
forward-looking statements
This Universal Registration Document 2025 contains certain forward-
looking statements with respect to the company’s financial condition;
results of operations and business, including the strategic priorities;
financial, investment and capital targets; and the company’s ability to
contribute to the HSBC Group’s environmental, social and governance
(‘ESG’) ambitions, targets and commitments described herein.
Statements that are not historical facts, including statements about
the company’s beliefs and expectations, are forward-looking
statements. Words such as ‘may’, ‘will’, ‘should’, ‘expects’, ‘targets’,
‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’,
‘potential’ and ‘reasonably possible’, or the negative thereof, other
variations thereon or similar expressions are intended to identify
forward-looking statements. These statements are based on current
plans, information, data, estimates and projections, and therefore
undue reliance should not be placed on them. Forward-looking
statements speak only as of the date they are made. HSBC
Continental Europe makes no commitment to revise or update any
forward-looking statements to reflect events or circumstances
occurring or existing after the date of any forward-looking statements.
Any such forward-looking statements are not a reliable indicator of
future performance, as they may involve significant stated or implied
assumptions and subjective judgements which may or may not prove
to be correct.
In addition, the Universal Registration Document 2025 contains a
number of forward-looking statements (as defined above) with
respect to HSBC Continental Europe ESG-related ambitions, targets,
commitments, climate-related pathways, processes and plans, and
the methodologies and scenarios we use, or intend to use, to assess
our progress in relation to these (‘ESG-related forward-looking
statements’).
In preparing the ESG-related information contained in the Universal
Registration Document 2025, HSBC Continental Europe has made a
number of key judgements, estimations and assumptions, and the
processes and issues involved are complex. HSBC Continental
Europe has used ESG (including climate) data, models and
methodologies that we consider, as of the date on which they were
used, to be appropriate and suitable to understand and assess climate
change risk and its impact, to analyse financed emissions and
operational and supply chain emissions, to set ESG-related targets
and to evaluate the classification of sustainable finance and
investments. However, these data, models and methodologies are
often new, are rapidly evolving and are not of the same standard as
those available in the context of other financial information, nor are
they subject to the same or equivalent disclosure standards, historical
reference points, benchmarks or globally accepted accounting
principles. In particular, it is not possible to rely on historical data as a
strong indicator of future trajectories in the case of climate change
and its evolution. Outputs of models, processed data and
methodologies are also likely to be affected by underlying data quality,
which can be hard to assess and HSBC Continental Europe expects
industry guidance, market practice, and regulations in this field to
continue to change. HSBC Continental Europe also faces challenges
in relation to its ability to access data on a timely basis, lack of
consistency and comparability between data that is available and its
ability to collect and process relevant data. Consequently, the ESG-

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
2

related forward-looking statements and ESG metrics disclosed in the
Universal Registration Document 2025 carry an additional degree of
inherent risk and uncertainty.
Due to the unpredictable evolution of climate change and its future
impact and the uncertainty of future policy and market response to
ESG-related issues and the effectiveness of any such response,
HSBC Continental Europe may have to re-evaluate its progress
towards its ESG-related ambitions, targets and commitments in the
future, update the methodologies it uses or alter its approach to ESG
(including climate) analysis and may be required to amend, update and
recalculate its ESG-related disclosures and assessments in the future,
as market practice and data quality and availability develop.
No assurance can be given by or on behalf of HSBC Continental
Europe as to the likelihood of the achievement or reasonableness of
any projections, estimates, forecasts, ambitions, targets,
commitments, prospects or returns contained herein. Readers are
cautioned that a number of factors, both external and those specific
to HSBC Continental Europe, could cause actual achievements,
results, performance or other future events or conditions to differ, in
some cases materially, from those stated, implied and/or reflected in
any ESG-related forward-looking statement or metric due to a variety
of risks, uncertainties and other factors (including without limitation
those referred to below):
– Climate change projection risk: this includes, for example, the
evolution of climate change and its impacts, changes in the
scientific assessment of climate change impacts, transition
pathways and future risk exposure and limitations of climate
scenario forecasts;
– ESG projection risk: ESG-related metrics are complex and are still
subject to development. In addition, the scenarios employed in
relation to them, and the models that analyse them have limitations
that are sensitive to key assumptions and parameters, which are
themselves subject to some uncertainty, and cannot fully capture all
of the potential effects of climate, policy and technology-driven
outcomes;
– Data availability, accuracy, verifiability and data gaps: HSBC
Continental Europe’s disclosures are limited by the availability of
high quality data in some areas and its own ability to timely collect
and process such data as required. Where data is not available for all
sectors or consistently year on year, there may be an impact to its
data quality scores. The accuracy and reliability of data is also
impacted by the diverse range of internal and external data sources
and data structures needed for climate-related reporting. While
HSBC Continental Europe expects its data quality scores to improve
over time, as companies continue to expand their disclosures to
meet growing regulatory and stakeholder expectations, there may
be unexpected fluctuations within sectors year on year, and/or
differences between the data quality scores between sectors. Any
such changes in the availability and quality of data over time, or
HSBC Continental Europe’s ability to collect and process such data,
could result in revisions to reported data going forward, including on
financed emissions, meaning that such data may not be reconcilable
or comparable year-on year;
– Developing methodologies and scenarios: the methodologies and
scenarios HSBC Continental Europe uses to assess financed
emissions and set ESG-related targets may develop over time in line
with market practice, industry standards, regulation and/or
developments in science, where applicable. Such developments
could result in revisions to reported data, including on financed
emissions or the classification of sustainable finance and
investments, meaning that data outputs may not be reconcilable or
comparable year-on year; and
– Risk management capabilities: global actions, including HSBC
Continental Europe’s own actions, may not be effective in
transitioning to net zero and in managing relevant ESG risks,
including in particular climate, nature-related and human rights risks,
each of which can impact HSBC Continental Europe both directly
and indirectly through its customers, and which may result in
potential financial and non-financial impacts to HSBC Continental
Europe. In particular:
– HSBC Group may not be able to achieve i ts ESG ambitions,
targets and commitments (including with respect to the
positions set forth in its thermal coal phase-out policy and its
energy policy, and its targets to reduce its on-balance sheet
financed emissions and, where applicable, facilitated emissions
in its portfolio of selected high-emitting sectors), which may
result in its failure to achieve some or all of the expected
outcomes of its strategic priorities, and raise reputational
concerns; and
– HSBC Continental Europe may not be able to develop
sustainable finance and ESG-related products consistent with
the evolving expectations of its regulators, and its capacity to
measure the environmental and social impacts from its
financing activity may diminish (including as a result of data and
model limitations and changes in methodologies), which may
affect HSBC Continental Europe contributing to the HSBC
Group’s ability to achieve its ESG ambitions, targets and
commitments, including its net zero ambition, its targets to
reduce its on-balance sheet financed emissions and, where
applicable, facilitated emissions in its portfolio of selected high-
emitting sectors and the positions set forth in its thermal coal
phase-out policy and energy policy, and increase the risk of
greenwashing.
The HSBC Group’s data dictionaries and methodologies for preparing
the above ESG-related metrics and third-party limited assurance
reports can be found on: www.hsbc.com/who-we-are/esg-and-
responsible-business/esg-reporting-centre.
1 Includes provisions for termination benefits, impairment of non-financial assets, and other costs related to business disposals.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
3

Key financial metrics

Key financial metrics

For the year (€m) | 31 Dec 2025 | 31 Dec 2024 1
Net operating income before change in expected credit losses and other credit risk provisions in respect of continuing operations 2 | 3,683 | 3,547
Profit/(loss) before tax in respect of continuing operations | 725 | 1,138
Profit/(loss) for the year 3 | (644) | 603
Profit/(loss) attributable to shareholders of the parent company 3 | (657) | 568
At year end (€m) |  |
Total equity attributable to shareholders of the parent company | 13,381 | 14,642
Total assets | 251,391 | 265,008
Risk-weighted assets 4 | 60,303 | 63,297
Loans and advances to customers (net of impairment allowances) | 42,835 | 51,288
Customer accounts | 97,107 | 97,065
Capital ratios % |  |
Common equity tier 1 | 16.4 | 18.8
Total Tier 1 | 18.4 | 21.1
Total capital | 21.6 | 23.5
Leverage Ratio | 4.3 | 5.4
Liquidity Ratios % |  |
Liquidity Coverage Ratio (‘LCR’)5 | 147 | 150
Net stable Funding Ratio (‘NSFR‘)5 | 164 | 137
Performance, efficiency and other ratios % |  |
Return on average ordinary shareholders’ equity 3,6 | (6.1) | 4.3
Pre-tax return on average risk-weighted assets 3,6 | (0.9) | 1.7
Cost efficiency ratio in respect of continuing operations 7 | 75.8 | 65.4
Ratio of customer advances to customer accounts | 44.1 | 52.8

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Net operating income before change in expected credit losses and other credit risk provisions is also referred to as revenue.
3 Balances are disclosed in respect of continuing and discontinued operations. Refer to Note 2 of the consolidated financial statements.
4 RWAs for Q4 2025 are calculated based on CRR3 requirements. Comparatives are subject to CRR2 rules.
5 In line with CRR requirements, LCR is disclosed as an average of 12 months and NSFR at reporting date. Additionally, the components of the LCR & NSFR
calculation have been represented to comply with EBA reporting requirements.
6 Definitions and calculations of other alternative performance measures are included in our ‘Reconciliation of alternative performance measures’ on page 16.
7 Cost efficiency is defined as total operating expenses divided by net operating income before change in expected credit losses and other credit risk provisions.

Performance highlights
Revenue performance in 2025 was strong with increased client
activity and deposit growth in Corporate and Institutional Banking
(‘CIB’) offsetting the impacts of lower interest rates on net interest
margins.
During the year, HSBC Continental Europe accelerated the
execution of its strategy, completing the sale of the life insurance
business and the legacy retail portfolio in France, as well as the
private banking business in Germany. HSBC Continental Europe
also signed agreements to sell its custody and fund administration
businesses in Germany and its majority stake in HSBC Bank Malta
p.l.c. and simplified its organisation to make it more agile by
bringing together Commercial Banking and Global Banking and
Markets activities. These strategic actions resulted in a reported
loss for the year ending 2025.
The HSBC Group is focused on increasing its leadership and
market share in areas where it has a clear competitive advantage,
and where it has the greatest opportunity to grow and support its
clients. This includes connecting European clients to opportunities
across the HSBC Group’s international network and supporting the
needs of the HSBC Group’s global client base in Europe.
HSBC Continental Europe has been recognised as the #1 Trade
Finance Provider in Western Europe (Euromoney, 2026) and the
Best Bank for Cash and Liquidity Management in Europe (Treasury
Management International, 2026).
Net operating income before change in expected credit losses
and other credit impairment charges was EUR 3,683 million, up
compared to EUR 3,547 million in 2024, this increase being driven
by the gain on sale of the private banking business in Germany.
CIB revenues were stable with growth in markets activities and
deposit balances, offset by the impact of lower interest rates on
net interest margins. International Wealth and Premier Banking
(‘IWPB’) revenues were stable excluding the gain on sale of the
private banking business in Germany.
Change in expected credit losses and other credit impairment
charges was a charge of EUR 166 million, compared with a charge
of EUR 91 million in 2024. The cost of risk, at 39 basis points, was
driven by higher stage 3 provisions. The credit risk profile of the
portfolio remains diversified and stable.
Operating expenses were EUR 2,792 million in 2025, up
compared to EUR 2,318 million in 2024, due to restructuring costs
of EUR 473 million 1 and investment in technology.
Profit before tax, in respect of continuing operations, was EUR
725 million, compared to EUR 1,138 million in 2024 driven by the
above-mentioned restructuring costs.
Loss after tax, in respect of continuing and discontinued
operations, was EUR 644 million, compared to a profit of
EUR 603 million in 2024, and included the loss on sale of the life
insurance business and the retained portfolio of home and certain
other loans in France.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
4

Presentation of activities and strategy

Presentation of activities and strategy
About HSBC Group
With assets of USD 3.2 trillion and operations in 57 countries and
territories at 31 December 2025, HSBC is one of the largest banking
and financial services organisations in the world. Approximately 41
million customers bank with the HSBC Group and the HSBC Group
employs around 208,000 full-time equivalent staff.

HSBC's strategic priorities
The HSBC Group strategy supports its ambition to be the most
trusted bank globally, putting customers at the heart of everything it
does. HSBC helps meet its customers' financial needs and supports
them to achieve their goals with its products and services, while
navigating the complexities of the global market through its deep
international network, supported with the stability and strength of its
balance sheet. HSBC Group priorities are:
– Be simple and agile: HSBC aims to make fast, safe decisions -
adapting to change by staying relevant, driving simplification and
being future ready through technology and digitisation.
– Drive customer-centricity: HSBC is intensely focused on its
customers – helping to deliver excellent outcomes, drive loyalty, and
serve its customers for the long term through the depth of what
HSBC offers as a franchise.
– Deliver focused sustainable growth: As a leading international
bank, HSBC aims to drive long-term, sustainable growth, focused on
areas of competitive strength.
HSBC's organisational structure
Since 1 January 2025, the HSBC Group has operated through four
new businesses to simplify its organisational structure and accelerate
delivery against its strategic priorities.
– Hong Kong: The Hong Kong business has a leading market position.
It comprises Retail Banking and Wealth and Commercial Banking of
HSBC Hong Kong and Hang Seng Bank.
– UK: The UK business has a leading market position. It comprises
Retail Banking and Wealth (including First Direct and M&S Bank)
and UK Commercial Banking, including HSBC Innovation Bank.
– Corporate and Institutional Banking ('CIB'): the CIB business is a
market leader in cross-border transaction banking and capital
markets. It integrates the Commercial Banking business (outside
the UK and Hong Kong) with Global Banking and Markets business.
– International Wealth and Premier Banking ('IWPB'): the IWPB
business comprises Premier banking outside of Hong Kong and the
UK, Private Bank, Asset Management and Insurance businesses.
HSBC's values
At HSBC, our values guide us in all our actions – from strategic
decisions to day-to-day interactions with customers and each other.
Our values are rooted in HSBC’s history, heritage and character, and
help us deliver on our purpose.
– We get it done: Moving at pace and making things happen.
– We value difference: Seeking out different perspectives.
– We take responsibility: Holding ourselves accountable and taking
the long view.
– We succeed together: Collaborating across boundaries.
HSBC in Europe
Europe plays a pivotal role in the global economy, contributing
approximately 25.5 per cent to global Gross Domestic Product ('GDP')
with an estimated USD 31.5 trillion out of a worldwide total USD
123.6 trillion (IMF World Economic Outlook, October 2025). Europe is
the world's leading exporter of services, where the region accounts
for nearly 49 per cent of global exports amid total global trade
exceeding USD 35 trillion in 2025 (UNCTAD December 2025, Global
Trade Update and Handbook of Statistics). Europe's share of global
trade stands at around 18-20 per cent, based on EU figures for goods
(UNCTAD December 2025 Global Trade Update). Europe ranks as the
second-largest exporter of manufactured goods behind China (WTO
Key Insights and Trends in 2024).
H SBC Bank plc is the parent company of HSBC Continental Europe
and is one of Europe’s largest banking and financial services
organisations with assets of £709 billion at 31 December 2025. HSBC
Bank plc employs around 9,800 people across its locations. HSBC
Bank plc is responsible for HSBC’s European business, apart from UK
retail and some UK commercial banking activity which, post ring-
fencing, is managed by HSBC UK Bank plc. HSBC Bank plc helps to
facilitate trade within Europe and between Europe and other
jurisdictions where the HSBC Group has a presence.
HSBC Bank plc operates as one integrated business with two main
hubs in London and Paris, with presence in 18 markets. The London
hub consists of the UK non-ring fenced bank, which provides overall
governance and management for the Europe region as a whole and is
a global centre of excellence for Corporate and Institutional Banking
for the Group.

About HSBC Continental Europe
HSBC in Continental Europe
HSBC Continental Europe is the dedicated Intermediate Parent
Undertaking ('IPU') for the European Union ('EU') and comprises
mainly the Paris hub, its EU branches (Belgium, Czech Republic,
Germany, Ireland, Italy, Luxembourg, Netherlands, Poland, Spain and
Sweden) and its banking subsidiaries in Malta and Luxembourg.
HSBC Continental Europe has been undertaking a transformation to
focus its resources on being the leading corporate and institutional
bank for international clients in Europe. This includes increasing our
leadership and market share in areas where we have a clear
competitive advantage, and the greatest opportunity to grow and
support our clients, in particular connecting European clients to
opportunities across HSBC’s international network and supporting the
European needs of HSBC’s global client base. HSBC Continental
Europe's strategy is consistent with the HSBC strategy and supports
the Group's ambition to be the most trusted bank globally, putting
customers at the heart of everything it does.
Focusing for Growth
Measures taken to restructure the business will position HSBC
Continental Europe to be even more competitive by focusing its
resources on areas where it has a clear competitive advantage. Over
the coming period, HSBC Continental Europe will finalise the exits of
these non-strategic activities while continuing to invest in people and
technology to meet the needs of its international clients.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
5

Presentation of activities and strategy

On 1 January 2024, HSBC Continental Europe completed the sale of
its French retail banking operations. In accordance with the terms of
the sale, HSBC Continental Europe retained a portfolio of EUR 7.1
billion of home and certain other loans at the time of the sale. On
31 October 2025, HSBC Continental Europe completed the sale of
this portfolio to a consortium comprising Rothesay Life Plc and CCF.
On 3 October 2025, HSBC Continental Europe completed the sale of
its private banking business in Germany to BNP Paribas.
On 31 October 2025, HSBC Continental Europe completed the sale of
its French life insurance business, HSBC Assurances Vie (France), to
Matmut Société d’Assurance Mutuelle.
On 14 May 2025, following HSBC Group announcements, HSBC
Continental Europe proposed developments for the bank that
reflected the acceleration of the implementation of HSBC’s strategy
aimed at simplifying the organisation to make it more agile, bringing
together Commercial Banking activities and Global Banking and
Markets activities. This project across 10 countries was subject to a
consultation with the European Works Council. Local consultations
were also required in France (through a ‘Plan de Sauvegarde de
l’Emploi‘ (Social Plan) including a voluntary scheme) and in Germany
before any implementation. The implementation of the reorganisation
of HSBC Continental Europe’s activities began in November 2025.
During 2025, HSBC Continental Europe recognised EUR 292 million of
restructuring costs relating to these actions, primarily termination
benefits.
On 27 June 2025, HSBC Continental Europe reached an agreement to
sell its custody business in Germany to BNP Paribas. This transaction
is anticipated to be completed in a phased manner, starting in the first
quarter of 2026.
On 11 July 2025, HSBC Continental Europe reached an agreement to
sell its fund administration business, Internationale
Kapitalanlagegesellschaft mbH (‘INKA’), to BlackFin Capital Partners
S.A.S. This transaction, which remains subject to regulatory approval,
is expected to complete in the second half of 2026.
On 16 September 2025, HSBC Continental Europe signed a put
option agreement with CrediaBank S.A. regarding the potential sale of
its majority shareholding of 70.03% in HSBC Bank Malta plc. On
22 December 2025, pursuant to the terms of the put option
agreement and following completion of HSBC Continental Europe's
employee information and consultation process in France, a Sale and
Purchase Agreement for the transaction was signed. This planned
Transaction would be expected to complete in the first half of 2027,
subject to obtaining corporate and regulatory approvals.
u For further details on disposals and events after the balance sheet date,
please see notes 1 ‘Basis of preparation and material accounting policies’ on
pages 198 to 199 and 14 ‘Events after the balance sheet date’on page 286.
Business segments
Aligned to the changes announced by HSBC Group during 2025,
HSBC Continental Europe managed its products and services through
its business lines: Corporate and Institutional Banking and
International Wealth and Premier Banking.
HSBC Continental Europe comprises CIB and IWPB businesses in
Europe and acts as a global connector, linking European clients to
opportunities across the HSBC global network, and global clients to
opportunities in Europe. It deploys capital to support European clients,
that in turn drives business booked through the HSBC network.
Corporate and Institutional Banking, International Wealth and Premier
Banking, as well as the Corporate Centre (comprising: certain legacy
assets and central stewardship costs) operating segment results are
presented on this basis in 'Income statement by global business
(continuing operations)' on page 11.
These segments are supported by the Chief Operating Officer, and
global functions - including Risk, Finance, Compliance, Legal, People
and Internal Audit.
Corporate and Institutional Banking
CIB's ambition is to be the world’s leading international Corporate and
Institutional Bank, focused on Transaction Banking, Financing and
Distribution.
HSBC Continental Europe is fully aligned to this ambition.
International Wealth and Premier Banking
In Europe, IWPB serves customers through its distinct propositions
for Private Banking, Premier and International Banking, with a focus
on serving customers' wealth needs.
For HSBC Continental Europe, IWPB supports customers with their
financial needs through Asset Management and Private Banking in
addition to Wealth Management and Insurance in Malta.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
6

Presentation of activities and strategy

Opening up a world of opportunity
Our history

Focusing for growth (1/2) …
u | Disposal of HSBC Continental Europe’s retail operations in France
u | Disposal of the French Employee savings business to Natixis Interépargne
u | Announced the sale of the custody and the funds administration businesses in Germany
u | Disposal of the sale of private banking business in Germany
u | Launched the reorganisation of HSBC Continental Europe’s activities in line with Group strategy
u | Completed the sale of HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle
u |

Development of CCF
u | Grew externally through acquisitions in the first half of the century
u | Expanded the number of branches (200+) during the 1960's

Fulfilling our European mission
u | From HSBC France to HSBC Continental Europe following the UK’s departure from the European Union (client migration, product setup, and legal entity restructuring)
u | Ambition to be the leading international wholesale bank in Europe, focused on clients that value our network

2018-
21
1900-
2000
2000-
10s
2024-
26
1894
2022-
23

Creation of Banque Suisse et Francaise
u | Founded by Ernest Méjà and Benjamin Rossier
u | Developed as a commercial bank in France
u | Adopted the name Crédit Commercial de France in 1917 following the merger with Maison Aynard et Fils and Caisse de Crédit de Nice

Building a strong universal French bank
u | HSBC Group acquired CCF in 2000 and listed on the Paris Stock Exchange
u | Established a strong platform in one of the main European markets in the Eurozone
u | CCF SA became HSBC France in November 2005

Repositioning our activities
u | Focus our wholesale activities on strategic international clients and relevant product proposition
u | Acquisition of HSBC Malta and HSBC Germany to become the Group’s chosen entity for the European Intermediate Holding Company (‘IPU’)
u | Acquisition of HSBC Private Bank (Luxembourg) SA
u | Disposal of HSBC Continental Europe’s branch operations in Greece

Focusing for growth (2/2) …
u | Completed the sale of the French loan portfolio retained after the disposal of our retail banking business in France to a consortium comprising Rothesay Life plc and CCF
u | Signature of a SPA with Credia Bank S.A. regarding the potential sale of our shareholding (70.03%) in HSBC Bank Malta p.l.c
u | Continuing to support the growth of the international corporate and institutional bank and deliver on HSBC Continental Europe’s strategic ambition

Our resources
Our commitments

u | c. 187,766 clients 1 from personal banking customers, small and medium companies to corporate clients
u | c. 7,143 employees 2 supporting our customers through our expertise, know-how and intangible resources 3
u | Future Skills and Change management programmes

Transition to net zero
Our ambition is to become a net zero bank by 2050.
Supporting our customers is core to our strategy
with financing their transition both critical to them
and aligned with the Group’s net zero ambition.
To support this ambition, the updated Net Zero
Transition plan sets out a commercially grounded,
customer-focused approach.
We value
difference
Seeking out
different
perspectives

u | AA- / Aa3 / A+ top ratings from the three main rating agencies
u | 130 years of expertise in France
u | Presence in 12 countries, supporting clients across borders

We succeed
together
Collaborating
across boundaries
Our
ambition
Be be the most
trusted bank
globally, putting
customers at the
heart of everything
we do

u | Dedicated Sustainable Finance & Transition and Sustainable Capital Markets departments aiming at originating and structuring sustainable transactions
u | Tailored product proposition including commercial partnerships with third parties to help support customers on their transition journey

Building Inclusion and Resilience
To help create long-term value for all stakeholders,
we foster inclusion and help build resilience for our
colleagues, our customers and within broader
society. For colleagues, we focus on creating an
inclusive environment and offer resources that
support well-being. We strive to provide an
accessible banking experience for our customers
by providing resources that help them manage
their finances, and services that help them protect
what they value. Our global philanthropy strategy
is focused on working alongside the communities
where we operate to help enable positive
outcomes.
Our Values
We take
responsibility
Holding
ourselves
accountable
and taking the
long view

u | 1,888 IT applications 4 consumed, of which 71 per cent are Group applications
u | Eco-responsible headquarters
u | Effective and compliant Business Continuity Lifecycle Controls

We get it
done
Moving at pace and
making things happen
Acting Responsibly
Our conduct approach guides us to do the right thing
and focus on the impact we have on our customers
and the financial markets in which we operate. It
complements our purpose and values and, together
with our policies and procedures, provides an
enterprise-wide, outcome-focused framework.

u | €3,683m Net Operating Income 5
u | 16.4 per cent CET1 ratio with a solid financial structure
u | €251bn total assets

1 c. 164,884 active customers in IWPB and c. 22,882 CIB Mastergroups
2 Aligned to Table of social performance indicators of HSBC Continental
Europe in HSBC Continental Europe’ Universal Registration Document
2025
3 HSBC Continental Europe recognises intangible resources as non-
physical assets and capabilities, which, despite lacking physical form,
are essential to the Bank’s business model, strategic objectives, and
sustainable value creation. These resources underpin HSBC
Continental Europe’s commitments. Their management is integral to
maintaining regulatory compliance and supporting the Bank’s long-
term success
4 1,348 apps consumed from the Group, 540 apps owned in
the countries of HSBC Continental Europe in 2025.
5 Net operating income before change in expected credit
losses and other credit risk provisions in respect of
continuing operations
HSBC Continental Europe

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
7

Presentation of activities and strategy

Opening up a world of opportunity
Our added value for clients
HSBC helps meet its customers' financial needs and supports
them to achieve their goals with its products and services,
while navigating the complexities of the global market
through its deep international network, supported with the
stability and strength of its balance sheet.
Our priorities are:
– Be simple and agile: We aim to make fast, safe decisions -
adapting to change by staying relevant, driving simplification
and being future ready through technology and digitisation
– Drive customer-centricity: We are intensely focused on its
customers – helping to deliver excellent outcomes, drive
loyalty, and serve its customers for the long term through the
depth of what HSBC offers as a franchise
– Deliver focused sustainable growth: As a leading
international bank, we aim to drive long-term, sustainable
growth, focused on areas of competitive strength
Network &
Balance Sheet
Committing our
balance sheet
& providing
access to
high growth
markets
Transaction
Banking
Providing products to
help clients trade and
invest internationally
Client Experience
& Expertise
Making life easier for our
clients while helping them
develop a sustainable
future
Our clients & products
CIB Clients
CIB Services and
Transaction Banking
CIB Financing
IWPB

Coverage and network banking
u | Institutional clients
u | Global Corporates clients
u | International Mid-Market clients
u | Innovation Banking clients

u | Deposits
u | Payments
u | Trade
u | FX / Markets
u | Securities Services

u | Capital Markets & Advisory
|  | Debt Capital Markets, Leveraged Acquisition Finance
u
| u | Strategic Equity Financing
| u | Corporate Risk Solutions
u | Structured Finance
u | Infrastructure Finance
u | Sustainability Finance

In Continental Europe, IWPB serves customers – from individuals to high-net-worth families – with their financial needs through:
u | Private Banking
u | Asset Management
u | Retail Banking (in Malta)
u | Insurance (in Malta)

Our impact
2
5
4
3
1
Sustainable
Finance
Act Responsibly
Governance and
Security
Client
Satisfaction
Employability
and Inclusion
Obtained a certification of Top
Employer by the Top Employers
Institute for its commitment to
promoting an inclusive and
supportive company culture
Market Leader and Best
in Service for Trade
Finance in four European
markets award
99.3 per cent of internal
staff completed training on
Conduct and Financial
Crime risk
89 per cent controls
assessed effective and
compliant
$152.5bn contribution to
Group’s sustainable
finance 2030 ambition 1
0 cybersecurity incident
over the last 12 months
3.0 per cent Voluntary Turnover
rate in High Performer Employee
Western Europe's Best
bank for transaction services
by Euromoney
98.4 per cent of suppliers
signed the Supplier C ode of
Conduct in the renewal
process
29.2 per cent representation
of women in senior executive
positions
1 Cumulative contribution to Group target since 2020 of USD 152.5bn representing 31 per cent of total Group progress to date in
its ambition to provide between USD 750 billion and USD 1,000 billion in sustainable financing and investment by 2030. This
ambition aims to help promote green, sustainable and socially-focused business, as well as sustainable investing products and
solutions
HSBC Continental Europe

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
8

Geopolitical, economic and regulatory background and outlook

Geopolitical, economic and regulatory
background and outlook
E conomic background
Global
Global economic activity was resilient in 2025. After the initial shock
caused by the announcement of high reciprocal tariffs on “Liberation
Day” on 2 April 2025, several countries were able to negotiate trade
deals leading to lower tariffs. These trade deals have also provided
more visibility for businesses, reducing the negative impact stemming
from economic uncertainty.
In the US, domestic demand has softened in the first half of the year,
reflecting a slowdown in consumer spending. Consumers have
become more cautious given less favourable labour market
conditions. However, this development has been mitigated by firmer
non-residential investment, led in particular by AI-related spending.
GDP growth was firmer in Q325 (4.4 per cent annualised) but a
temporary slowdown is expected in Q425 due to the shutdown in the
federal government (from 1 October to 12 November 2025).
Outside the US, GDP growth has surprised to the upside in Q325 in
many emerging countries, particularly in ASEAN. Exports have largely
held up well in these countries in spite of the US tariffs. The AI
hardware boom has also been a supportive factor, especially in Asia.
In Mainland China in particular, exports remained resilient, explaining
in large part GDP growth of 5.0 per cent year-on-year in 2025. The fall
in exports to the US has been largely offset by a rise in shipments to
the rest of the world, especially Europe and ASEAN. Domestic
demand indicators have however signalled weakness in private
consumption and investment. As such the Chinese authorities have
maintained a pro-growth bias, in spite of the recent upside surprises
in GDP.
Eurozone
The Eurozone economy has also been surprisingly resilient in 2025,
despite the uncertainty related to global trade. Annual GDP growth
has averaged 1.5 per cent year-on-year in the three first quarters of
2025, even if flattered by rapid growth in Ireland (led in particular by
trade in pharmaceutical products). Stripping out Ireland, growth
averaged 0.9 per cent year-on-year. However, growth has been
relatively unbalanced across countries, with Spain performing well
and Germany continuing to lag other large countries.
Leading indicators have pointed to further economic resilience in the
eurozone for the fourth quarter of 2025, suggesting a modest pace of
growth could be sustained into 2026. However, it would need to be
supported by domestic demand as net trade is likely to continue to
weigh on growth. Whilst the trade deal reached between the US and
the EU in August (lowering the US reciprocal tariffs to 15 per cent on
imports of many EU goods) has reduced the level of uncertainty, it
still implies a negative impact for EU exporters. In particular, Germany
and Italy could be more impacted than other countries as they are
more dependant on US domestic demand relative to the Eurozone
average.
Eurozone fiscal policy should turn expansionary in 2026, providing a
much-needed boost to activity. This should be the case especially in
Germany, reflecting higher spending in defence in addition to the rise
in investments related to infrastructure and climate (with the creation
of an off-budget fund of EUR 500 billion over 12 years).
The German fiscal plans should lead to a discretionary expansion of
almost 1 per cent of GDP in 2026. However, the pace of
implementation remains uncertain and could be impacted by slow
procurement processes in the defence industry and lengthy hurdles
regarding infrastructure.
Outside Germany, European funds (under the Next Generation EU)
should continue to support public spending in Italy and Spain in 2026.
France however is expected to continue to pursue fiscal
consolidation, even if the public deficit could remain above 5 per cent
of GDP in 2026 (from an estimate of 5.4 per cent in 2025) on basis of
the latest budget plans.

Economic outlook
Inflation and central banks' actions
Inflation is expected to remain sticky in the US due to the rise in
tariffs and immigration restrictions. HSBC economists expect core
inflation to stay above 2.5 per cent throughout 2026. For the US
Federal Reserve (Fed), it would complicate the decision on additional
rate cuts.
For the ECB decisions, the central case of HSBC economists is that
the easing cycle is over, after the rate cut of June 2025 (with the key
deposit rate lowered to 2.00 per cent). Since then, the ECB
progressed in its inflation mandate without additional monetary
easing, given the inflation convergence to the 2 per cent target and
the continuous resilience in the labour market. Consistent with this,
the ECB has been on hold for the four last meetings of 2025. Barring
any downward surprises on growth and inflation, the ECB is expected
to remain on hold throughout 2026. The view of HSBC economists is
that the next move of the ECB will be a rate hike and that it will occur
in the second half of 2027.
Growth risks
Whilst not the central scenario of HSBC economists, several factors
could cause global growth to falter in 2026, bringing to an end the
economic resilience seen in the recent months.
First, if there is a bubble in AI stocks, any correction could cause a
sharp drop in global technology investment. It would impact the US
economy hardest, but the Eurozone would likely feel the impact
through weaker sentiment and export demand.
Second, even if trade uncertainty has eased in recent months, a
resurgence in trade tensions cannot be ruled out. For example, the
US administration could restore punitive tariffs against a specific trade
partner, if it considers that this partner doesn’t comply with the

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
9

Geopolitical, economic and regulatory background and outlook

commitments under the latest bilateral trade agreements. Geopolitics
could also be a factor, as signalled in January by the threat of US
tariffs on several European countries to increase pressure over
Greenland.
Third, volatility in long-term interest rates has to be monitored, given
the lingering uncertainty on central banks’ policies. In particular, the
situation in the US needs to be monitored, notably the sustainability
of long-term public finances.
Finally, geopolitical risks continue to have potential implications for
commodity prices, in particular for energy and food.

Regulatory environment
Basel III Reforms
The revised Capital Requirements Regulation (‘CRR3’) implementing
the Basel 3 reforms package entered into force in the EU on the
1 January 2025, except for the changes to the market risk standards
following the Basel Committee’s Fundamental Review of the Trading
Book (‘‘FRTB’). In September 2025, the EU legislators agreed to
postpone the implementation of the FRTB by one additional year until
1 January 2027. The European Commission (‘EC’) subsequently
published a consultation on its proposal to apply temporary targeted
measures as well as multipliers on the market risk capital
requirements for banks that will be negatively impacted as the new
rules enter into force. The objective is to maintain a level playing field
for EU banks in light of the uncertainty over the application of the
FRTB framework in other major jurisdictions.
In parallel, the European Banking Authority (‘EBA’) and the European
Central Bank (‘ECB’) continue to issue supporting regulatory
standards and guidelines mandated by the CRR3.
Revised Capital Requirements
Directive ('CRD6')
As part of the EU’s broader banking reform package, CRD6 introduces
significant changes to the prudential framework for banks. This
includes new regulatory requirements for environmental, social and
governance (‘ESG’) and cryptoasset-related risks across the prudential
framework, some adaptations to Pillar 2, and capital buffer
requirements to account for the changes to Pillar 1 requirements
arising from CRR3. It also includes additional powers for national
supervisors, particularly for restrictions on cross-border activities
provided by non-EU banking entities to EU-based clients, subject to
certain exemptions.
CRD6 rules will have to be implemented into national law across
Member States in 2026, with an additional one-year transition period
for provisions relating to cross-border services and third country
branches.
Securitisation reforms
In 2025, the EC proposed a package of measures aimed at improving
and simplifying the EU’s securitisation framework. The proposed
amendments are intended to reduce the operational constraints and
costs for both issuers and investors in securitisations, to lower capital
and liquidity requirements for banks holding less risky tranches and
make the significant risk transfer (‘SRT’) test more transparent and
less prescriptive. The proposal is still under tripartite discussions
between the EU legislators. The European Parliament (‘EP’) is
expected to issue its final draft version in 2026.
As part of its operational simplification agenda, the ECB aims to
reduce its timeline for SRT approvals by launching a fast-track process
in 2026. Eligible transactions are expected to be approved within two
weeks, down from the current three months.
Capital buffers
In France, the Haut Conseil de Stabilité Financière (‘HCSF’) has
decided to maintain the countercyclical capital buffer rate at 1 per
cent. In Luxembourg, the Commission de Surveillance du Secteur
Financier has decided to maintain it at 0.5 per cent. In 2025, the HCSF
repealed a decision that required a 3 per cent sectorial systemic
buffer for exposures to highly leveraged non-financial groups
established in France.
Simplification reforms
The ECB Governing Council endorsed a recommendation from its
High-level Task Force to simplify the EU banking regulatory,
supervisory, and reporting framework. The aim is to reduce
unnecessary complexity, support smaller banks, and improve
efficiency, while maintaining financial stability and harmonisation
across the EU. A key regulatory simplification measure is to reduce
the number of elements in the risk weighting and leverage ratio
framework to make capital rules clearer and less fragmented such as
merging several capital buffers without lowering overall capital
requirements. These recommendations are expected to be
considered by the EC in their report on the overall situation of the
banking system in Europe, due in 2026.
Environmental, Social and
Governance (‘ESG’) risks
In 2025 the EU continued to refine its ESG regulatory framework
progressing the phased implementation of the Corporate
Sustainability Reporting Directive (‘CSRD’) and European
Sustainability Reporting Standards (‘ESRS’), while EU co-legislators
reached provisional agreement on a targeted Omnibus package to
simplify CSRD and related Corporate Sustainability Due-Diligence
requirements (‘CSDDD’), expected to be enacted in the first quarter
of 2026. The amendments to CSRD are expected to enter into force
for 31 December 2027.
Additionally, the EC also indicated its intention to adopt a revised
ESRS Delegated Act in 2026, following work to simplify the
standards, with application expected from financial years beginning on
or after 1 January 2027.
From a prudential perspective, in January 2025, the EBA published its
final guidelines on the management of ESG risks setting out the
requirements for the identification, measurement, management and
monitoring of ESG risks mandated under the Capital Requirements
Directive (‘CRD6’). The guidelines applied from 11 January 2026.
Additionally, in November 2025, the EBA published its final Guidelines
on environmental scenario analysis to complement its guidelines on
the management of ESG risks, applicable from 1 January 2027.
In May 2025, the EBA published a consultation paper on proposed
amendments to the ESG Pillar 3 disclosures including ESG risk-related
disclosures introduced by CRR3. Once finalised, the guidelines are
expected to be applicable with first reference date as 31 December
2026.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
10

HSBC Continental Europe Consolidated Results

Consolidated Results
Use of alternative performance measures
HSBC Continental Europe's reported results are prepared in
accordance with International Financial Reporting Standards (‘IFRS
Accounting Standards’) as detailed in the Financial Statements
starting on page 190.
In measuring our performance, the financial measures that we use
include those derived from our reported results in order to eliminate
factors that distort period-on-period comparisons.
These are considered alternative performance measures. All
alternative performance measures are described and reconciled to the
closest reported financial measure when used.
The global business segmental results are presented in accordance
with IFRS 8 ‘Operating Segments’.

Consolidated income statement

| 31 Dec 2025 | 31 Dec 2024 1
| €m | €m
Continuing operations |  |
Net interest income | 1,382 | 1,695
Net fee income | 1,180 | 1,214
Net income from financial instruments held for trading or managed on a fair value basis | 818 | 484
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss | 39 | 40
Changes in fair value of long-term debt and related derivatives | 2 | 3
Changes in fair value of other financial instruments mandatorily measured at fair value through profit and loss | 35 | 63
Gains less losses from financial investments | 7 | (2)
Insurance finance income/(expense) | (34) | (38)
Insurance service result | 10 | 18
Gains/(losses) recognised on assets held for sale | 143 | (11)
Other operating income/(expense) | 101 | 81
Net operating income before change in expected credit losses and other credit impairment charges 2 | 3,683 | 3,547
Change in expected credit losses and other credit impairment charges | (166) | (91)
Net operating income | 3,517 | 3,456
Total operating expenses | (2,792) | (2,318)
Profit/(loss) before tax | 725 | 1,138
Tax expense | (64) | (406)
Profit/(loss) after tax in respect of continuing operations | 661 | 732
Profit/(loss) after tax in respect of discontinued operations | (1,305) | (129)
Profit/(loss) for the period | (644) | 603
– shareholders of the parent company | (657) | 568
– non-controlling interests in respect of continuing operations | 13 | 35
– non-controlling interests in respect of discontinued operations | — | —

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Net operating income before change in expected credit losses and other credit impairment charges is also referred to as revenue.
Continuing Operations
Net interest income was EUR 1,382 million in 2025, down from
EUR 1,695 million in the previous year due to lower interest rates and
the impact associated with the sale of the private banking business in
Germany.
Net fee income was EUR 1,180 million in 2025, down from
EUR 1,214 million in 2024, driven by an increase in brokerage costs
resulting from higher client activities in Germany related to equity
derivatives and lower lending fees, partly offset by increased demand
in Global Payment Solutions and higher fees in Investment Banking.
Net income from financial instruments held for trading or
managed on a fair value basis was EUR 818 million in 2025, up
from EUR 484 million in 2024. The increase was driven by higher
trading volumes and client demand in Equity Markets, notably from
structured equity derivatives in Germany and increased client activity
in Global Debt Markets.
Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through
profit and los s was a EUR 39 million gain,remaining stable compared
to a gain of EUR 40 million in 2024.
Changes in fair value of long-term debt and related derivatives
were EUR 2 million in 2025, down from EUR 3 million in 2024.
Changes in fair value of other financial instruments mandatorily
measured at fair value through profit and loss were
EUR 35 million in 2025 compared to EUR 63 million in 2024. This
reflects a lower increase in the fair value of principal investment.
Gains less losses from financial investments were a gain of
EUR 7 million, compared to a EUR 2 million loss in 2024, driven by
increased investment in government bonds and the disposal of bonds
during the first half of 2025.
2 Includes provisions for termination benefits, impairment of non-financial assets, and other costs related to business disposals.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
11

HSBC Continental Europe Consolidated Results

I nsurance finance expense was EUR 34 million in 2025, down from
an expense of EUR 38 million in 2024.
Insurance Service result was EUR 10 million in 2025, down from
EUR 18 million in 2024.
Gains recognised on assets held for sale were EUR 143 million in
2025, from the sale of the private banking business in Germany.
In 2024, loss of EUR 11 million was from the sale of employee
savings account keeping and custody activities.
Other operating income was EUR 101 million, up from
EUR 81 million in the prior year, driven by royalty income in France.
Net operating income before change in expected credit losses
and other credit impairment charges was EUR 3,683 million, up
from EUR 3,547 million in 2024.
Change in expected credit losses and other credit impairment
charges was a net charge of EUR 166 million compared to a net
charge of EUR 91 million in 2024, primarily driven by higher stage 3
provisions.
Operating expenses amounted to EUR 2,792 million in 2025, up
from EUR 2,318 million in 2024, mainly due to restructuring costs and
investment in technology.
Profit before tax for continuing operations was EUR 725 million in
2025, compared to EUR 1,138 million in the prior year.
Profit after tax for the period in respect of continuing operations
was down from EUR 732 million in 2024 to EUR 661 million in 2025.
Loss attributable to shareholders of the parent company in 2025
was EUR 657 million and included the loss on sale of the insurance
business and the retained portfolio of home and certain other loans in
France reported as discontinued operations in accordance with
IFRS 5.

Income statement by global business (continuing operations)

| At 31 Dec 2025
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
Net operating income before change in expected credit losses and other credit impairment charges | 2,971 | 576 | 136 | 3,683
– of which: net interest income/(expense) | 1,475 | 147 | (240) | 1,382
– of which: Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 484 | 6 | 328 | 818
Change in expected credit losses and other credit impairment charges | (172) | 5 | 1 | (166)
Net operating income | 2,799 | 581 | 137 | 3,517
Total operating expenses | (2,141) | (450) | (201) | (2,792)
Profit/(loss) before tax | 658 | 131 | (64) | 725
| At 31 Dec 2024 1,2
Net operating income before change in expected credit losses and other credit impairment charges | 2,971 | 444 | 132 | 3,547
– of which: net interest income/(expense) | 1,570 | 175 | (50) | 1,695
– of which: Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 314 | 4 | 166 | 484
Change in expected credit losses and other credit impairment charges | (100) | 7 | 2 | (91)
Net operating income | 2,871 | 451 | 134 | 3,456
Total operating expenses | (1,868) | (388) | (62) | (2,318)
Profit/(loss) before tax | 1,003 | 63 | 72 | 1,138

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.
Profit before tax, in respect of continuing operations, was EUR 725
million, compared to EUR 1,138 million in 2024 driven by the above-
mentioned restructuring costs.
Net operating income before change in expected credit losses
and other credit impairment charges was EUR 3,683 million, up
compared to EUR 3,547 million in 2024, this increase being driven by
the gain on sale of the private banking business in Germany. CIB
revenues were stable with growth in markets activities and deposit
balances, offset by the impact of lower interest rates on net interest
margins. International Wealth and Premier Banking (‘IWPB’) revenues
were stable excluding the gain on sale of the private banking business
in Germany.
Change in expected credit losses and other credit impairment
charges was a charge of EUR 166 million, compared with a charge of
EUR 91 million in 2024. The cost of risk, at 39 basis points, was
driven by higher stage 3 provisions. The credit risk profile of the
portfolio remains diversified and stable.
Operating expenses were EUR 2,792 million in 2025, up compared
to EUR 2,318 million in 2024, due to restructuring costs of
EUR 473 million 2 and investment in technology.
Corporate and Institutional Banking
(‘CIB’)
Profit before tax was EUR 658 million in 2025, down from
EUR 1,003 million in 2024.
Revenue was EUR 2,971 million in 2025, stable from EUR 2,971
million in prior year. Revenue was driven by markets activities
(Foreign Exchange and Debt & Equity trading business), and by lower
interest rates on deposits.
Change in expected credit losses and other credit impairment
charges were a net charge of EUR 172 million in 2025, compared to a
net charge of EUR 100 million in 2024 due to additional stage 3
provisions.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
12

HSBC Continental Europe Consolidated Results

Operating expenses were EUR 2,141 million in 2025,up from
EUR 1,868 million in 2024 driven by restructuring costs and
investment in technology.
Loans and advances to customers were EUR 38.6 billion at the end
of December 2025 compared to EUR 40.3 billion as of December
2024 with lower demand for lending.
Customer accounts were EUR 91.0 billion in 2025, compared to
EUR 90.4 billion as of December 2024 reflect the increase in
customer deposits and the classification of the custody business in
Germany as held for sale.
International Wealth and Premier
Banking (‘IWPB’)
Profit before tax was EUR 131 million in 2025, compared to
EUR 63 million in the prior year.
Revenue was EUR 576 million in 2025, up from EUR 444 million in
2024, driven by the gain on the sale of the private banking business in
Germany, partly offset by reductions in net interest income on
deposits in Malta.
Change in expected credit losses and other credit impairment
charges was a net release of EUR 5 million in 2025, compared with a
net release of EUR 7 million in 2024.
Operating expenses were EUR 450 million, up from EUR 388 million
in 2024, driven by restructuring costs.
Loans and advances to customers were EUR 4.2 billion at
December 2025, stable compared to EUR 4.3 billion at December
2024.
Deposits were EUR 6.5 billion at December 2025, compared to EUR
7.1 billion in December 2024 .
Corporate Centre
Loss before tax was EUR 64 million in 2025 compared to a EUR 72
million profit in 2024.
Revenue was EUR 136 million in 2025, stable compared to EUR 134
million in 2024.
Operating expenses were EUR 201 million in 2025 compared with
EUR 62 million in 2024 due to restructuring costs of central
functions.

Consolidated balance sheet

| At
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total assets | 251,391 | 265,008
Cash and balances at central banks | 58,092 | 48,907
Trading assets | 30,801 | 22,853
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 1,619 | 1,563
Derivatives | 40,579 | 43,251
Loans and advances to banks | 5,715 | 5,703
Loans and advances to customers | 42,835 | 51,288
Reverse repurchase agreements – non-trading | 29,308 | 25,764
Financial investments | 28,003 | 20,740
Assets held for sale | 377 | 25,477
Other assets | 14,062 | 19,462
Total liabilities | 237,825 | 250,177
Deposits by banks | 14,514 | 11,820
Customer accounts | 97,107 | 97,065
Repurchase agreements – non-trading | 14,486 | 12,344
Trading liabilities | 18,376 | 16,480
Financial liabilities designated at fair value | 11,086 | 9,906
Derivatives | 33,178 | 41,857
Debt securities in issue | 14,129 | 15,257
Liabilities under insurance contracts | 531 | 518
Liabilities of disposal groups held for sale | 10,648 | 24,718
Other liabilities | 23,770 | 20,212
Total equity | 13,566 | 14,831
Total shareholders’ equity | 13,381 | 14,642
Non-controlling interests | 185 | 189

Assets
Total assets were EUR 251.4 billion at December 2025, down from
EUR 265.0 billion at December 2024
Trading assets increased from EUR 22.9 billion at December 2024 to
EUR 30.8 billion at December 2025 reflecting increased client activity
in government bonds.
Financial assets measured at fair value through profit and loss were
EUR 1.6 billion at December 2025, stable compared to E UR 1.6 billion
in the prior year.
Derivatives were EUR 40.6 billion in 2025, down from EUR 43.3 billion
in 2024 as a result of mark-to-market movements notably on foreign
exchange contracts and interest rate swaps.
Loans and advances to customers were EUR 42.8 billion in 2025
compared to EUR 51.3 billion in 2024 driven by the sale of the French
retained portfolio of home and certain other loans.
Reverse repurchase agreements – non-trading – of EUR 29.3 billion in
2025 increased from EUR 25.8 billion in 2024 reflecting higher client
activity.
Financial investments were EUR 28.0 billion at December 2025
compared to EUR 20.7 billion in 2024 driven by investment in high
quality bonds forming part of the bank's liquid asset buffer.
3 This includes the impact of the sale of our retail banking operations in France.

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13

HSBC Continental Europe Consolidated Results

Assets held for sale were EUR 0.4 billion at December 2025
compared to EUR 25.5 billion in 2024. 2025 balances relate to the
assets of the c ustody and fund administration businesses in
Germany, and to shares in Sino AG. 2024 balances relate to the
French life insurance business and the private banking business in
Germany.
Liabilities
Total liabilities were EUR 237.8 billion at December 2025, down from
EUR 250.2 billion at December 2024.
Customer accounts were EUR 97.1 billion at December 2025,
compared to EUR 97.1 billion at December 2024 driven by growth in
deposits, offset by the classification of the custody business in
Germany as held for sale.
Repurchase agreements – non trading – increased from
EUR 12.3 billion in 2024 to EUR 14.5 billion in 2025 reflecting
increased positions with banks.
Trading liabilities were EUR 18.4 billion in 2025, up from
EUR 16.5 billion in 2024 d riven by increased government bond trading
volumes.
Derivatives were EUR 33.2 billion in 2025, decreased from
EUR 41.9 billion in prior year as a result of mark-to-market
movements on interest rate swaps.
Debt securities in issue were EUR 14.1 billion in 2025, down from
EUR 15.3 billion in prior year.
Liabilities under insurance contracts were EUR 0.5 billion in 2025,
stable from EUR 0.5 billion in 2024.
Liabilities of disposal groups held for sale decreased to
EUR 10.6 billion from EUR 24.7 billion in 2024. Balances in 2025
relate to liabilities of custody business in Germany. 2024 balances
relate to the French life insurance business and the private banking
business in Germany sold during 2025.
Equity
Shareholders’ equity stood at EUR 13.4 billion in 2025, down from
EUR 14.6 billion in 2024, mainly driven by the loss in respect of
discontinued operations and dividends distribution during the year.
The CET1 (Common Equity Tier 1) ratio was 16.4 per cent
at December 2025 and the total capital ratio was 21.6 per cent.
Liquidity and funding
Outstanding medium and long-term funding and the bank’s main
financing transactions in 2025 are presented in the liquidity and
financing management section on pages 168 to 169.
The average short-term ratio (liquidity coverage ratio or 'LCR') was
147 per cent and the average long-term ratio (net stable funding ratio
or 'NSFR') was 164 per cent 3.

Balance Sheet Information
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
At 31 Dec 2025 |  |  |  |
Loans and advances to customers 4 | 38,581 | 4,245 | 9 | 42,835
Loans and advances to customers classified as held for sale 1 | 294 | — | — | 294
Customers accounts | 90,988 | 6,454 | (335) | 97,107
Customers accounts classified as held for sale 1 | 10,506 | — | — | 10,506
At 31 Dec 2024 3 |  |  |  |
Loans and advances to customers 4 | 40,337 | 4,267 | 6,684 | 51,288
Loans and advances to customers classified as held for sale 2 | — | 298 | — | 298
Customers accounts | 90,431 | 7,055 | (421) | 97,065
Customers accounts classified as held for sale 2 | — | 2,010 | — | 2,010

1 Includes loans and advances and customers accounts related to the custody and fund administration business in Germany.
2 Includes loans and advances and customers accounts related to the planned sale of the private banking business in Germany.
3 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.
4 Includes EUR 30,346 million (2024: EUR 33,737 million) related to corporate and commercial loans and advances to customers with a total provision of EUR 516
million (2024: EUR 432 million).

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
14

HSBC Continental Europe Consolidated Results

Revenue by country (continuing operations)

| At 31 Dec 2025
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
France | 1,290 | 137 | 121 | 1,548
Germany | 847 | 248 | 10 | 1,105
EEA Branches | 750 | — | 2 | 752
Malta and Other Countries | 84 | 191 | 3 | 278
Revenue 1 | 2,971 | 576 | 136 | 3,683

| At 31 Dec 2024 2,3
France | 1,262 | 90 | 126 | 1,478
Germany | 861 | 124 | 1 | 986
EEA Branches | 760 | 1 | 4 | 765
Malta and Other Countries | 88 | 229 | 1 | 318
Revenue 1 | 2,971 | 444 | 132 | 3,547

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
3 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.

Net Interest Margin
Net interest margin is calculated by dividing net interest income as reported in the income statement by the average balance of interest-earning
assets.
Average balances are based on daily averages for the principal areas of our banking activities with monthly or less frequent averages are used
elsewhere.

Net Interest Income
| 2025 | 2024
| €m | €m
Interest income | 6,242 | 8,219
Interest expense | (4,860) | (6,524)
Net interest income from continuing operations | 1,382 | 1,695
Net interest income from discontinued operations | 111 | 28
Net interest income | 1,493 | 1,723
Average interest-earning Assets | 184,038 | 178,548
| % | %
Net interest margin 1 | 0.81 | 0.97

1 Net interest margin is net interest income expressed as an annualised percentage of average interest-earning assets.

Summary of interest income by asset type
| 2025 | 2024
| Average balance | Interest income 1 | Yield | Average balance | Interest income 1 | Yield
| €m | €m | % | €m | €m | %
Short term funds and loans and advances to banks | 47,891 | 1,051 | 2.19 | 54,314 | 1,862 | 3.43
Loans and advances to customers | 45,281 | 1,843 | 4.07 | 51,580 | 2,413 | 4.68
Reverse repurchase agreements – non-trading 2 | 39,029 | 2,027 | 5.19 | 30,753 | 2,499 | 8.13
Financial investments | 26,141 | 823 | 3.15 | 25,874 | 953 | 3.68
Other interest-earning assets | 25,696 | 744 | 2.90 | 16,027 | 785 | 4.90
Total interest-earning assets | 184,038 | 6,488 | 3.53 | 178,548 | 8,512 | 4.77
Trading assets and financial assets designated or mandatorily measured at fair value 3 | 25,947 | 621 | 2.39 | 22,718 | 510 | 2.24
Expected credit losses provision | (493) |  |  | (607) |  |
Non-interest-earning assets | 78,164 |  |  | 80,359 |  |
Total | 287,656 | 7,109 | 2.47 | 281,018 | 9,022 | 3.21

1 Balances are disclosed in respect of continuing and discontinued operations.
2 The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported with a higher yield and cost of funds.
3 Interest income arising from trading assets is included within net trading activities in the income statement.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
15

HSBC Continental Europe Consolidated Results

Summary of interest expense by type of liability and equity
| 2025 | 2024
| Average balance | Interest expense 1 | Cost | Average balances | Interest expense 1 | Cost
| €m | €m | % | €m | €m | %
Deposits by banks | 15,931 | 393 | 2.47 | 13,623 | 503 | 3.69
Customer accounts | 68,674 | 1,864 | 2.71 | 61,566 | 2,579 | 4.19
Repurchase agreements – non- trading 2 | 18,213 | 1,445 | 7.93 | 17,521 | 1,953 | 11.15
Debt Securities in issue – non- trading | 20,510 | 745 | 3.63 | 20,126 | 995 | 4.94
Other interest-bearing liabilities | 24,222 | 548 | 2.26 | 16,903 | 759 | 4.49
Total interest-bearing liabilities | 147,550 | 4,995 | 3.39 | 129,739 | 6,789 | 5.23
Trading liabilities and financial liabilities designated at fair value (excluding own debt issued)3 | 29,249 | 709 | 2.42 | 28,153 | 694 | 2.47
Non-interest-bearing current accounts | 22,003 |  |  | 30,669 |  |
Total equity and other non-interest bearing liabilities | 88,854 |  |  | 92,457 |  |
Total | 287,656 | 5,704 | 1.98 | 281,018 | 7,483 | 2.66

1 Balances are disclosed in respect of continuing and discontinued operations.
2 The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported with a higher yield and cost of funds.
3 Interest expense arising from trading liabilities is included within net trading activities in the income statement.

Post-balance sheet events
At its meeting on 24 February 2026, the Board of Directors resolved to distribute a dividend of EUR 5.20 per share (representing a total payout
of approximately EUR 1.4 billion) in respect of the 2025 financial year. This dividend, if approved by shareholders at the Combined General
Meeting, will be payable after deducting the interim dividend of EUR 1.06 per share already paid to shareholders in respect of the 2025 financial
year.
There have been no other significant events between 31 December 2025 and the date of approval of these financial statements by the Board of
Directors which would require an adjustment or additional disclosure in the financial statements.

Historical data (unaudited)

| 2025 | 2024 | 2023 | 2022 | 2021
| €m | €m | €m | €m | €m
HSBC Continental Europe |  |  |  |  |
Profit before tax 1 | (601) | 1,030 | 1,258 | (1,689) | 285
Profit attributable to shareholders 1 | (657) | 568 | 883 | (1,092) | 269
At 31 Dec |  |  |  |  |
Shareholders’ equity | 13,381 | 14,642 | 12,342 | 11,358 | 7,667
Loans and advances to customers and banks 2 | 48,550 | 56,991 | 55,943 | 49,573 | 66,444
Customer accounts and deposits by banks 3 | 111,621 | 108,885 | 104,151 | 94,874 | 88,692
Total Balance Sheet | 251,391 | 265,008 | 282,977 | 279,081 | 222,664
Number of employees (full-time equivalents) | 6,101 | 6,739 | 9,969 | 10,408 | 7,451
Ratios 4 |  |  |  |  |
– Total capital ratio (%) | 21.6 | 23.5 | 20.7 | 20.2 | 16.5
– Common Equity Tier One Ratio (%) | 16.4 | 18.8 | 15.7 | 15.3 | 12.0
– Cost efficiency ratio (reported basis) (%) | 75.8 | 65.4 | 60.5 | 82.9 | 86.6

1 Balances are disclosed in respect of continuing and discontinued operations.
2 Loans and advances to customers and banks classified as held for sale are not included. Refer to Note 2 of the consolidated financial statements.
3 Customer accounts and deposits by banks classified as held for sale are not included. Refer to Note 2 of the consolidated financial statements.
4 CET1 capital and RWAs (material holding) for December 2023 has been restated to reflect the payment of AT1 dividends.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
16

HSBC Continental Europe Consolidated Results

Reconciliation of alternative performance measures
Return on average ordinary shareholders’ equity and pre-tax return on average
risk-weighted assets
Return on average ordinary shareholders’ equity is calculated by
dividing profit attributable to the ordinary shareholders of the
parent company (‘reported results’) by average ordinary
shareholders’ equity (‘reported equity’) for the period. The
adjustment to reported results and reported equity excludes
amounts attributable to non-controlling interests and holders of
other equity instruments (additional tier 1 capital).
Pre-tax return on average risk-weighted assets is calculated by
dividing profit before tax by average risk-weighted assets for the
period.

Return on average shareholders’ equity and pre-tax return on average risk-weighted assets |  |
| At
| 31 Dec 2025 | 31 Dec 2024 1
| €m | €m
Profit |  |
Profit/(loss) before tax in respect of continuing operations | 725 | 1,138
Profit/(loss) before tax in respect of discontinued operation | (1,326) | (108)
Profit/(loss) before tax | (601) | 1,030
Profit/(loss) attributable to the ordinary shareholders of the parent company 2 | (755) | 485
Equity |  |
Average ordinary shareholders’ equity 2 | 12,425 | 11,314
Risk-weighted assets |  |
Average risk-weighted assets 3 | 64,594 | 61,600
Ratio % |  |
Return on average ordinary shareholders’ equity | (6.1) | 4.3
Pre-tax return on average risk-weighted assets | (0.9) | 1.7

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 This excludes amounts attributable to non-controlling interests and holders of other equity instruments (additional tier 1 capital).
3 RWAs for Q4 2025 are calculated based on CRR3 requirements. Comparatives are subject to CRR2 rules.

Credit ratings
HSBC Continental Europe is rated by three major agencies: Standard & Poor’s, Moody’s and FitchRatings.

As at 31 December 2025 | Standard & Poor’s | Moody’s | FitchRatings
Long-term Senior preferred | A+ | Aa3 | AA-
Outlook | Stable | Stable | Stable
Short term | A-1 | P-1 | F1+

During the year 2025, Moody's upgraded the rating of the Long-term Senior preferred from A1 to Aa3, with the other ratings remaining
unchanged. There were no changes to HSBC Continental Europe ratings from Standard & Poor's and Fitch Ratings during 2025.
Annual review meetings with rating agencies were held in May 2025.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
17

Other information on HSBC Continental Europe

Other information
Information on supplier payable amounts schedule
(Articles L. 441-14 and D. 441-6 of the French Commercial code)

Article D. 441–6–I: Received invoices by HSBC Continental Europe subject to late payment delays at year-end
| 0 day (for information) | 1 to 30 days | 31 to 60 days | 61 to 90 days | over 91 days | Total (1 day and more)
(A) Late payment buckets
Number of invoices, of which: | 1,056 |  | 307
– payable to third-party | 999 |  |  |  |  | 114
– payable to HSBC Group entities 1 | 57 |  |  |  |  | 193
Amount of invoices including VAT (in €k), of which: | 79,016 | 24,109 | 1,123 | 739 | 2,187 | 28,158
– payable to third-party | 24,931 | 760 | 142 | 318 | 20 | 1,240
– payable to HSBC Group entities 1 | 54,085 | 23,349 | 981 | 421 | 2,167 | 26,918
Percentage of total purchasing in the year (%) | 5.25% | 1.6% | 0.07% | 0.05% | 0.15% | 1.87%
(B) Invoices excluded from (A) in respect of litigations or not accounted
Number of invoices excluded, of which: | 574 |  |  |  |  |
– payable to third-party | 518 |  |  |  |  |
– payable to HSBC Group entities 1 | 56 |  |  |  |  |
Amount of excluded invoices including VAT (in €k), of which: | 13,279 |  |  |  |  |
– payable to third-party | 11,659 |  |  |  |  |
– payable to HSBC Group entities 1 | 1,620 |  |  |  |  |
(C) Suppliers' payment terms (contractual or legal terms)
Payment terms used to assess the late payments | Contractual terms: as per contract

1 Excluding transactions between HSBC Continental Europe and its branches.

Information on client receivable amounts schedule
(Articles L. 441-14 and D. 441-6 of the French Commercial code)

Article D. 441–6–I: Issued invoices by HSBC Continental Europe subject to late payment delays at year-end
| 0 day (for information) | 1 to 30 days | 31 to 60 days | 61 to 90 days | over 91 days | Total (1 day and more)
(A) Late payment buckets
Number of invoices, of which: | 221 |  | 1,595
– receivable from third-party | 84 |  |  |  |  | 1,412
– receivable from HSBC Group entities 1 | 137 |  |  |  |  | 183
Amount of invoices excluding VAT (in €k), of which: | 12,011 | 23,868 | 5,549 | 5,744 | 15,560 | 50,721
– receivable from third-party | 3,110 | 13,568 | 2,154 | 5,260 | 10,702 | 31,684
– receivable from HSBC Group entities 1 | 8,901 | 10,300 | 3,395 | 484 | 4,858 | 19,037
Percentage of total revenue of the year (%) | 0.53% | 1.06% | 0.25% | 0.25% | 0.69% | 2.25%
(B) Invoices excluded from (A) in respect of litigations or not accounted
Number of invoices excluded, of which: | — |
– receivable from third-party | — |  |  |  |  |
– receivable from HSBC Group entities 1 | — |  |  |  |  |
Amount of excluded invoices excluding VAT (in €k), of which: | — |
– receivable from third-party | — |  |  |  |  |
– receivable from HSBC Group entities 1 | — |  |  |  |  |
(C) Clients' payment terms (contractual or legal terms)
Payment terms used to assess the late payments | Contractual terms: 30 days

1 Excluding transactions between HSBC Continental Europe and its branches.
This information does not include banking transactions and certain related transactions as HSBC Continental Europe considers that they do not
fall within the scope of the information to be produced.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
18

Corporate Governance report

Corporate Governance report
Under article L. 225-37 of the French Commercial Code, the Board of
Directors presents to the shareholders’ general meeting a report on
Corporate Governance attached to the management report referred to
in article L. 225-100 of the French Commercial Code.
This report was submitted to the Nomination and Corporate
Governance Committee for the part relating to Corporate Governance
and to the Remuneration Committee for the part relating to
remuneration at their meetings held on 30 January 2026.

Corporate governance bodies and regime
Governance bodies structure

|  |  |  |  |  |  |  |  |  |  |  |  |  | HSBC Continental Europe Board of Directors |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | p |  |  |  |
|  |  |  |  |  |  | u | Risk Committee |  |  |  |  |  |  | Remuneration Committee
|  |  |  |  |  |  |  |  | u | Audit Committee |  |  |  |  |  |  | Nomination and Corporate Governance Committee
|  |  |  |  |  |  |  |  |  |  |  |  |  | General Management |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | p |  |  |  |
|  |  |  | Risk Management Meeting |  |  |  |  |  | u | Operating Committee |  |  |
|  |  |  |  | p |  |  |  |  |  |  |  | p |  |  |
|  |  |  |  |  |  |  |  |  | Asset and Liability Committee |  |  |  |  |  |
Non-Financial Risks |  | Financial Risks |  |  | Businesses' Risk Committees and international locations |  | Ad hoc and cross- risk Committees |  |  | Businesses' Committees |  |  |
Forums and Working Groups |  |  |  |

This Corporate Governance report includes detailed information on:
– Membership, duties and work of the Board of Directors on pages 19
to 27;
– Membership, duties and work of the Board Committees on pages
27 to 32; and
– General Management and Operating Committee membership on
pages 32 and 33.
Risks, issues or other matters requiring attention from the
management body may be escalated through line management, or
through the committee structure described above.
In particular regarding the information flow on risk, the HSBC
Continental Europe Risk Management Meeting, which is chaired by
the Chief Risk Officer and includes the Chief Executive Officer, the
Deputy Chief Executive Officers and the other members and standing
attendees of the Operating Committee, is the overarching committee
overseeing risk management and permanent control.
Relevant information, in particular on risk, is shared on a quarterly
basis with the Board and its Audit and Risk Committees by the Bank’s
senior management.
Corporate Governance code
As permitted under article L. 22-10-10 of the French Commercial
Code, HSBC Continental Europe has decided not to make reference
to a corporate governance code worked out by representative
business organisations. The reasons for this are threefold:
– As a bank, HSBC Continental Europe is a highly regulated entity,
including regarding its corporate governance, and is under the
supervision of the European Central Bank, that controls HSBC
Continental Europe's compliance with applicable regulation. This
ensures that high standards of governance, common to all European
banks under the supervision of the European Central Bank, are
applied with HSBC Continental Europe.
– HSBC Continental Europe does not have any publicly traded stocks
in issuance.
– As a 99.9 per cent owned subsidiary of the HSBC Group, HSBC
Continental Europe, like all entities of the HSBC Group, is
committed to applying high standards of corporate governance. The
HSBC Group has a comprehensive set of principles, policies and
procedures, influenced by the UK Corporate Governance Code,
which includes requirements in terms of the independence,
composition and effectiveness of the Board of Directors, in order to
ensure that the HSBC Group is well managed, with appropriate
oversight and control. HSBC Continental Europe adhered to these
principles, policies and procedures throughout 2025.
4 Director standing for re-election at the Annual General Meeting to be held on 27 March 2026.

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Information on governance structure, the Chairman’s role, Board
composition, functioning, organisation and work, and on Executives'
compensation are presented in the relevant sections of this report.

Board of Directors
Board of Directors’ internal rules
The Board of Directors’ internal rules were first established in 1996,
and have been updated several times since their implementation. The
Board last reviewed and updated these internal rules at its meeting
held on 7 February 2025 and 11 February 2026.
The Board’s internal rules define the composition, the duty and the
conducting of the Board meetings and the information to the Board of
Directors. They indicate the main duties and arrangements for
exercising the function of Chairman, Chief Executive Officer and
Deputy Chief Executive Officers (the latter two functions making up
the Company's management body in its management function or
'dirigeants effectifs').
Furthermore, the Board’s internal rules define, in accordance with the
HSBC Group rules, the duties and responsibilities of the Audit
Committee, the Risk Committee, the Nomination and Corporate
Governance Committee and the Remuneration Committee (as
stipulated below in the parts related to each of these Committees’
assignments). They also incorporate ethical rules and rules regarding
conflicts of interests prevention and management to be followed by
the Directors of HSBC Continental Europe, setting out their rights and
duties.
Changes in the Board composition
Changes occurred during 2025
The Nomination and Corporate Governance Committee reviewed the
position of the Directors whose term of office expired at the Annual
General Meeting on 24 March 2025, namely Paule Cellard, Stephen
O’Connor, Dominique Perrier, Arnaud Poupart-Lafarge, Eric Strutz and
Michaël Trabbia.
The Board decided to propose to renew the term of office of Michaël
Trabbia and to note the expiration of the term of office of the other
Directors, which was approved by the shareholders at the Annual
General Meeting held on 24 March 2025.
Upon recommendation of the Nomination and Corporate Governance
Committee, the Board further decided to propose the appointment of
two new Directors: Monika Rast and Xavier Martiré which was
approved by the shareholders at the General Meeting held on
24 March 2025. These appointments were made for three years and
will expire at the 2028 Annual General Meeting approving the 2027
annual financial accounts.
Further to the resignation of Pablo Forero, effective on 13 May 2025,
the Board decided to coopt Carol Sergeant as a Director. Her
appointment will expire at the expiration of Pablo Forero’s initial term
of office, namely the 2026 Annual General Meeting approving the
2025 annual financial accounts.
T he terms of office of Irina Aggelidakis, Pascale Peluso and
Emanuelle Vigneron, Directors elected by employees, expired on
25 September 2025, with the election by employees of two new
Directors. At the election, Pascale Peluso was reconducted and
Grégory Wésélaqui was newly elected to the Board of Directors, both
for a three-year term expiring on 25 September 2028.
Finally, Andrew Wild stepped down as Chief Executive Officer and
Director of HSBC Continental Europe on 31 December 2025.
Changes planned for the first quarter of 2026
Pursuant to the governance rules of the HSBC Group regarding the
length of presence of Directors on Group entities' boards, the term of
office of Lucile Ribot will not be renewed at the 2026 Annual General
Meeting.
On the proposal of the Nomination and Corporate Governance
Committee, the Board of Directors decided to submit the
appointment of Madhukar Dayal as a Director for approval of the
General Meeting on 27 March 2026.
Chair of the Board of Directors
Duties of the Chairman of the Board
The Chairman of the Board has a duty to ensure the proper
functioning of HSBC Continental Europe’s governing bodies. In
particular, he conducts the work of the Board and coordinates it with
that of the specialised Committees. He ensures that the Directors are
in a position to perform their duty, and in particular, ensures that they
are in possession of all the information they require for the discharge
of their duty.
Presentation of the Chairman of the Board of
Directors

Jean Beunardeau Chairman of the Board of Directors

Member of the Nomination and Corporate Governance Committee
First elected: 2008 as a Director and 2021 as Chairman of the Board.
Last re-elected: 2023. Term ends: 2026 4.
Principal position: Chairman of the Board, HSBC Continental Europe.
Vice Chairman Global Banking Europe.
Other directorships in the HSBC Group: Chairman of the Board,
HSBC Global Asset Management (France). Director, Valeurs
Mobilières Elysées. Directorship expired in 2025 : Vice Chairman and
Director, HSBC Assurances Vie (France) (until 31 October 2025).
Other directorships outside of the HSBC Group: Member of the
Supervisory Board, Société Anonyme des Galeries Lafayette. Censor,
Motier (since February 2025). Chairman, L'offrande Musicale.
Treasurer, Association du Golf de Saint-Cloud. Member of the Great
Council, Cercle de l'Union Interalliée. Member of the Board, Fondation
Schlumberger pour l'Education et la Recherche.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: two directorships as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1962. Graduated from Ecole
Polytechnique, Telecom Engineer and Master of Economics, he
began his career at the Ministry of Finance, at the Forecasting
Department then at the Treasury. He became Technical Advisor to the
Prime Minister in 1995. He joined HSBC Continental Europe in 1997
in Corporate Finance and became Managing Director in 2000. He was
appointed Co-Head of Corporate Investment Banking and Markets,
mainly in charge of Corporate and Investment Banking in 2004. He
5 Director standing for re-election at the Annual General Meeting to be held on 27 March 2026.

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was appointed Senior Corporate Vice-President in 2005 and then
Head of Global Banking and Markets of HSBC Continental Europe in
2007. In 2010, he was appointed Deputy Chief Executive Officer, in
addition to his role as Head of Global Banking and Markets France.
The same year, he was appointed Head of Global Banking,
Continental Europe, HSBC Group.
His direct responsibilities within Global Banking and Markets ended in
2019. From 2012 to 2021, he was Chief Executive Officer of HSBC
Continental Europe. Since 2021, he has been Chairman of the Board
of Directors of HSBC Continental Europe and Vice Chairman Global
Banking Europe.

2024 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe, HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: L'offrande Musicale (formely Académie France-Chine). Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée. Director: Fondation Schlumberger pour l'Education et la Recherche.
2023 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe, HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: Académie France-Chine. Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.
2022 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe, HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: Académie France-Chine. Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.
2021 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe. HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: Académie France-Chine. Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.

Composition of the Board as of
31 December 2025
On 31 December 2025, the Board of Directors comprised
11 Directors, of whom 9 were appointed by the Shareholders’
General Meeting and 2 were elected by employees. A representative
of the Social and Economic Council attends Board meetings, without
voting rights.
The Directors elected by Shareholders’ General Meeting or by
employees have a three-year term of office.
The Board membership complies with the policies the Board had
implemented on the assessment of the suitability of members of the
management body and key function holders and on diversity.
Presentation of the Directors as of 1 January
2026

Deirdre Hannigan Independent Director

Chair of the Audit Committee, Chair of the Nomination and Corporate
Governance Committee (since March 2025), and Member of the Risk
Committee.
First elected: 2023.Term ends: 2026 5.
Other directorship in the HSBC Group: Director (since 1 March
2025), Member of the Audit Committee, and Member of the
Transformation, Operational Resilience and Technology Committee,
HSBC Bank plc.
Other directorships outside the HSBC Group: Chair, Dublin City
University Education Trust. Director, New Ireland Assurance Company
plc.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: 2 directorships as member of a
Board of Directors or a Supervisory Board.
Skills and experience: Born in 1960. Irish nationality. Graduated with
a Master of Business Studies from the University College Dublin. She
is a qualified accountant and a chartered director of the Institute of
Directors. From 2017 until 2022, Deirdre Hannigan was the Group
Chief Risk Officer and a member of the Executive Management team
of AIB Group Plc. She joined AIB from the National Treasury
Management Agency where she was Chief Risk Officer during two
years. Before that, she held a number of senior international risk
management roles with GE Capital and progressively senior roles in
Bank of Ireland, primarily in Strategy and Risk Management. Previous
to that, she worked in Retail and Corporate Banking with AIB and
Rabobank.
6 Listed Company.

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2024 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chair of the Board: Dublin City University Education Trust. Director, New Ireland Assurance Company plc.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Dublin City University Education Trust.
2022 | –
2021 | –

Kerstin Lopatta Independent Director

Member of the Audit Committee.
First elected: 2024. Term ends: 2027.
Other directorships: Member of the Supervisory Board, Eurokai
GmbH & Co KGaA, and Freenet AG. V ice Chair (since 6 January
2026: acting Chair) of the Sustainability Reporting Board and Special
Liaison to the ISSB, European Financial Reporting Advisory Group
(EFRAG). Member of the Sustainability Reporting Technical
Committee, Accounting Standards Committee of Germany (ASCG).
Member of the Sustainable Finance Council, German Ministry of
Finance (until February 2025).
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: Three directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1969. German nationality. Diploma in
Business and Economics from the Leibniz University in Hanover and
Ph.D. at the Chair of Business Administration, Auditing and Corporate
Governance from Goethe University in Frankfurt. She is a Professional
Supervisory Board Member of the German Stock Exchange and an
EFFAS Certified ESG Analyst® (CESGA). She is professor of Financial
Accounting, Auditing and Sustainability at the University of Hamburg,
adjunct professor at the Faculty of Law, Economics and Finance at
the University of Luxembourg, and affiliated with City University of
Hong Kong as a visiting professor. Before embarking on her academic
career, she worked as a consultant both within Deloitte & Touche
GmbH Hanover and Mannheim and Feix Steuerberatungsgesellschaft
Hanover.

2024 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Member of the Supervisory Board: Eurokai GmbH &Co KGaA, Freenet AG. Vice Chair of the Sustainability Reporting Board and Special Liaison to the ISSB: European Financial Reporting Advisory Group (EFRAG). Member of the Sustainability Reporting Technical Committee: Accounting Standards Committee of Germany (ASCG). Member of the Sustainable Finance Council: German Ministry of Finance.
2023 | –
2022 | –
2021 | –

Xavier Martiré Independent Director

Chairman of the Remuneration Committee, Member of the
Nomination and Corporate Governance Committee.
First elected: 2025. Term ends: 2028.
Other directorships: Chief Executive Officer, Chief Executive Officer
and Chair of the Management Board, Elis SA 6.
Directorships expired in 2025: Chief Executive Officer and Chair of
the Board, M.A.J. SA. Chair, Elis Luxembourg SA. Director, Pierrette
T.B.A. SA. Director, Elis Manomatic SA. Director, Elis Italia SpA.
Director, S.P.A.S.T SA.Director, Gafides SA, Director, Berendsen Ltd.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive
and one as member of a Board of Directors or a Supervisory Board.
Skills and Experience: Born in 1971. French Nationality. Diploma
from Ecole Polytechnique de Paris (1995) and Ecole Nationale des
Ponts et Chaussées (1997). Joined Elis SA in 1999 and after having
held various roles, including Deputy General Manager for France
between 2006 and 2008, he was appointed as Chairman of the
Management Board (Président du Directoire) of Elis SA in 2008.

2024 | –
2023 | –
2022 | –
2021 | –

7 Listed Company.
8 Director standing for re-election at the Annual General Meeting to be held on 27 March 2026.

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Pascale Peluso Director elected by employees

Member of the Remuneration Committee.
First elected: 2022. Last re-elected: 2025. Term ends: 2028.
Principal position: Chief Operating Officer – Principal Investment
Support and Head of Affiliates and Participations Department, HSBC
Continental Europe.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1967. Graduated with a Master's
Degree in Law, Economics and Management for Professional
Purposes, major in Finance and with the Certification of the French
Financial Market Authority. She joined HSBC in 1989. From 1993 to
2010, she was Head of Securities Back-Office at HSBC Securities
(France). Since 2011, she has been Chief Operating Officer – Principal
Investment Support of HSBC Continental Europe. She was also
appointed Head of the Subsidiairies and Investments Department in
2012 and Chief Financial Officer of HSBC Real Estate Leasing (France)
in 2018.

2024 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2023 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2022 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2021 | –

Monika Rast Independent Director

Member of the Risk Committee.
First elected: 2025. Term ends: 2028.
Other directorships: Member of the Supervisory Board, Allianz
Global Investors GmbH.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: two directorships as member of
a Board of Directors or a Supervisory Board.
Skills and Experience: Born in 1972. German nationality. Graduated
with a m aster degree in roman philology and in business
administration with majors in accounting/controlling and in capital
markets financing from the Ludwig-Maximilians-University in Munich.
Holds a Certification by Deutsche Boerse AG as qualified supervisory
and advisory board member. She worked most of her career within
the financial services sector, working for UniCredit, where she held
several senior leadership positions within UniCredit Bank AG. She
was Head of Debt Capital Markets Origination Financial Institutions
and Public Sector from 2010 to 2015, followed by Head of Joint
Ventures CIB & UBK, Investment Banking Products for Corporate
Commercial Banking Clients from 2015 to 2019. She then served as
Head of Multinational Corporates from 2019 to 2022, Deputy Head of
CIB Germany in 2021, and from 2022 to 2023, she was both Deputy
Head of Corporates and concurrently, Head of Industry Coverage
Capital Goods. M ost recently, she was a member of the management
board at UniCredit Bank AG from 2023 to 2024 where she was
responsible for Private&Wealth, Retail and Micro Business Clients.
From 2019 to 2024, she was also a member of the supervisory board
at UniCredit Bulbank (Bulgaria) and a member of its risk committe.

2024 | –
2023 | –
2022 | –
2021 | –

Lucile Ribot Independent Director

Member of the Audit Committee.
First elected: 2016. Last re-elected: 2023. Term ends: 2026.
Other directorships: Director, Imerys 7. Director, Kaufman & Broad
SA 5.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: three directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1966. Graduated from the Ecole des
Hautes Etudes Commerciales de Paris (‘HEC’). Senior Audit Manager
at Arthur Andersen (audit and consulting) from 1989 to 1994. She
joined the Fives Group in 1995 as a Group Financial Controller. From
1996 to 1997, Chief Financial and Administrative Officer of the
subsidiary Fives Solios. From 1998 to 2017, Chief Financial Officer of
Fives and Member of the Management Board from 2002 to 2017.

2024 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.
2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.
2022 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.
2021 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.

Carol Sergeant Independent Director

Chair of the Risk Committee, Member of the Audit Committee,
Member of the Nomination and Corporate Governance Committee,
Member of the Remuneration Committee.
First elected: 2025. Term ends: 2026 8.
Other directorships: Deputy C hair of the Board, Vida Group
Holdings Limited, Deputy Chair of the Board, Vida Bank Limited.

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Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: two directorships as member of
a Board of Directors or a Supervisory Board.
Skills and Experience: Born in 1952. British and Irish nationality. She
holds a Bachelor of Arts in Modern Languages from the University of
Cambridge and a Master of Business Administration in Finance from
the Bayes Business School. She was the Group Chief Risk Officer
(CRO) of Lloyds Banking Group PLC for seven years (2004-2011),
having had an earlier career at the Financial Services Authority
(1998-2003) and the Bank of England (1974-1998). Since 2011 she has
held non-executive positions on several commercial boards, including
Danske Bank, BNY Mellon SA/NV, been a trustee of several charities
including Chair of the UK Whistleblowing Charity PROTECT, a
member of Liikanen EU High Level Expert Group on banking reform
and has chaired independent reviews for the UK government on
Simple Financial Products and Legacy Pensions.

2024 | –
2023 | –
2022 | –
2021 | –

Michaël Trabbia Independent Director

Member of the Risk Committee.
First elected: 2022. Last re-elected: 2025. Term ends: 2028.
Principal position: Executive Vice President and Chief Executive
Officer Orange Wholesale, Orange Group.
Other directorships: Chairman of the Board (until 7 November 2025)
and Director (since 7 November 2025), Orange Concessions.
C hairman of the Board, Bleu. Director, Totem. Director, Nordnet.
Chairman of the Supervisory Board, FT Marine
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: Two directorships as member
of a Board of Directors or a Supervisory Board.
Skills and Experience: Born in 1976. Graduated of Ecole
Polytechnique and of Télécom ParisTech, and holding a Master’s of
Advanced Studies in Industrial Economics. Michaël Trabbia began his
career in 2001 at ARCEP (French National Regulatory Authority for
telecommunications and posts) where he was notably in charge of
the allocation and control of the mobile licences. In 2004, he was
appointed Technical Advisor to the cabinet of the Minister for
European Affairs, before joining the cabinet of the Minister for
Regional Development as Advisor for "ICT and Europe" in 2005. In
2007, he joined TDF (a french network and infrastructure operator) as
Head of Strategy and Development. In 2009, he was appointed
Deputy Chief of Staff to the Minister of Industry and Head of
"Industrial Sectors Policy", before joining the Orange Group in 2011
where he was the Group’s Director (SVP) for Corporate Public Affairs.
He then became in 2014 Chief of Staff for the Chairman and Chief
Executive Officer of Orange, and Secretary of the Group’s Executive
Committee. From 2016 to 2020, Michaël Trabbia served as Chief
Executive Officer of Orange Belgium and was then Chief Technology
and Innovation Officer and Group Head of Innovation from 2020 to
2023. He has been the CEO Wholesale of Orange Group since 2023.

2024 | Directorships in the HSBC Group: Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Orange Concessions, Bleu. Director: Totem, Nordnet. Chairman of the Supervisory Board: FT Marine.
2023 | Directorships in the HSBC Group: Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Orange Concessions. Director: Totem, Nordnet. Chairman of the Supervisory Board: FT Marine.
2022 | Directorships in the HSBC Group : Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman of the Board: Viaccess SA, Sofrecom,Soft@home. Director: Nordnet, BuYin S.A.: GSMA.
2021 | –

Grégory Wésélaqui Director elected by employees

First elected: 2025. Term ends: 2028.
Principal position: Client Service Manager, Global Payments
Solutions, HSBC Continental Europe.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as member of
a Board of Directors or a Supervisory Board.
Skills and Experience: Born in 1983. Graduated with a professional
bachelor's degree in management after a two-year banking vocational
degree. Holds a certification of the French Financial Market Authority
and an internal HSBC certification on Anti-Money Laundering. After
first professional experiences as insurance broker and account
manager, he joined HSBC in September 2013 where he worked as
digital account manager and then wealth management advisor. Since
2017, he has been a customer service representative for corporate
cash management.

2024 | –
2023 | –
2022 | –
2021 | –

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Board diversity
The diversity policy of the management body aims at reaching a
balance and a complementarity of age, gender, geographic,
professional and educational experience, independence, seniority in
the mandate and representation of employees.
The profiles of the Directors are diverse and complementary and
cover the spectrum of business lines and risks associated with the
activities of HSBC Continental Europe. According to the Articles of
Association, the Board of Directors includes two members elected by
the employees.
The Board includes four different nationalities and nearly two-thirds of
Directors have international experience. As at 31 December 2025, the
average age of the Directors in office is 58, lower than 59 at
31 December 2024, and their average tenure in the function is 4.1
years, lower than 4.9 in 2024. Excluding Directors elected by
employees, the Board comprises five women and four men, i.e. 56
per cent of women and 44 per cent of men.
Independent Directors
With respect to the criteria on independence defined in the guidelines
on the assessment of the suitability of members of the management
body issued by the European Banking Authority ('EBA') and the
European Securities and Markets Authority (‘ESMA’) and by the HSBC
Group, the Board of Directors determines, on appointment and
annually thereafter, whether each non-executive Director may be
considered as independent.
To do this, it examines whether there are relationships or
circumstances which are likely to affect, or could appear to affect, the
Director’s judgement. The Board should record its reasons if it
determines that a Director is independent notwithstanding the
existence of relationships or circumstances which may appear
relevant to its determination. As at 31 December 2025, seven
Directors can be deemed indepen dent, i.e. 63.6 per cent of all
Directors.
Board evaluation
Pursuant to HSBC Group's policy, a Board evaluation was conducted
externally in November and December 2025, under the responsibility
of the Nomination and Corporate Governance Committee and on the
basis of a questionnaire complemented by meetings between the
third party facilitating the evaluation and each Director. The
questionnaire covered the following themes:
– for the Board: governance, strategy, risk and financial performance;
Board and committee composition and structure; management
performance; corporate culture and conduct; meeting materials and
process; role of Company Secretary; Director self-assessment and
training; and Board behaviours, culture and effectiveness.
– for each of the Board Committees: committee performance;
committee composition and structure; management performance
and succession; meeting materials and process; and Committee
behaviours, culture and effectiveness.
Results of this evaluation and the update on main actions
implemented further to the evaluation conducted the year before
were discussed by the Board of Directors during a dedicated session
of 10 February 2026.
Overall, the work of the Board and its Committees was rated highly,
with feedback highlighting their diverse membership, efficiency, and
positive and constructive engagement with executive management.
The Board endorsed actions to further strengthen its governance,
strategic oversight, and operational efficiency. Enhancements
suggested in the review were reviewed and considered to have been
addressed.
Directors’ training and information
As required by the Board’s internal rules, Directors receive the
information they need to fulfil their duties and may ask to receive any
documents they deem useful.
In particular, the Board and the Board Committees may ask for a
presentation on a particular subject or issue at a future meeting.
According to the policy on training of the management body's
members, all new Directors, when taking up duty, receive an
information pack on HSBC Continental Europe, including legal
information about the Company and the role of Directors, as well as
the latest Universal Registration Document.
In addition, the Company Secretariat organises, for the new Director’s
benefit and depending on his/her needs and priorities, a programme
of training sessions regarding HSBC Continental Europe’s main
business lines and functions. Directors in office are also able to attend
these sessions. Thus, in 2025, induction programmes were organised
for Kerstin Lopatta, Xavier Martiré, Monika Rast, and Carol Sergeant.
An induction programme for Grégory Wésélaqui took place in early
2026.
In addition, eleven training sessions were organised during the year
for the management body: three on ESG-related topics, four on
technology, AI and data topics, two on regulatory topics, one on
recovery and resolution, and one on Corporate and Institutional
Banking global strategy.
Furthermore, Directors completed training, during the year, in the
form of e-learning on protective security, sustainability, health and
safety, wellbeing, appropriate behaviour, managing risk and
operational resilience, financial crime, cybersecurity and data risk,
competition law and conflicts of interest, using artificial intelligence,
social media and electronic communications safely and responsibly.
Meetings of the Board of Directors and of the Board’s Committees
are also used as an opportunity to provide Directors with information
that is essential for them to carry out their duties, and to update their
knowledge.
Moreover, the HSBC Group is also organising sessions, focusing on
Independent Non-Executive Directors and Board chairs. For example,
the Chairman of the Board and of the Board Committees were invited
to attend an in person event in London in March 2025 as part of the
Bank Chair programme. The Chairman of the Board and the
Chairpersons of the Audit and Risk Committees regularly attend
sessions bringing together their counterparts from the main European
entities.
Directors’ remuneration
The maximum total remuneration payable each year to Directors was
fixed at EUR 1.7 million, as decided by the Ordinary General Meeting
of 25 March 2024.
This remuneration is allocated according to the following rules,
decided by the Board of Directors at its meeting on 20 July 2023:
– each Director is allocated an annual flat fee of EUR 65,000, paid at
the conclusion of the Annual General Meeting;
– the additional annual flat fee paid to Board Committees members
amounts to;

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– EUR 40,000 for the Chair of the Audit Committee;
– EUR 45,000 for the Chair of the Risk Committee;
– EUR 25,000 for the members of the Audit Committee and of the
Risk Committee;
– EUR 13,000 for the Chair of the Nomination and Corporate
Governance Committee;
– EUR 11,000 for the members of the Nomination and Corporate
Governance Committee;
– EUR 10,000 for the Chair of the Remuneration Committee; and
– EUR 8,500 for the members of the Remuneration Committee.
Furthermore, within the HSBC Group, it is customary for Directors
performing other executive duties in the Group and Executive
Directors to renounce their remuneration in respect of their
directorships held in HSBC Group companies.
Directors and Executives of HSBC Continental Europe and its
subsidiaries adhere to this recommendation.
In 2025, in respect of 2024, Jean Beunardeau and Andrew Wild
renounced the payment of their remuneration in respect of their
directorship in HSBC Continental Europe.
It also has to be noted that, since his appointment as Chairman of the
Board of Directors as of 15 July 2021, Jean Beunardeau has received
compensation solely for his role as Vice Chairman Global Banking
Europe, which includes eligibility to a defined benefits supplementary
pension scheme, and does not receive compensation in the context
of his role as Chairman of the Board and as Director.
Moreover, in order to comply with the rules applied by the HSBC
Group, the Directors’ attendance record is not taken into account in
calculating Directors’ remuneration.
The total Directors’ remuneration net of social contributions, income
tax prepayment and withholding tax to be paid in 2026 in respect of
2025 amounts to EUR 0.79 million, to be compared to EUR 0.89
million paid in 2025 in respect of 2024.

Remunerations paid to Non-Executive Directors by HSBC Continental Europe, the companies it controls and the companies which control it (the HSBC Group)
| Remuneration in respect of the directorship paid in 2024 in respect of 2023 | Remuneration in respect of the directorship paid in 2025 in respect of 2024 | Other compensation paid in 2024 1 | Other compensation paid in 2025 1
| € | € | € | €
Directors performing their principal position in an entity of the HSBC Group |  |  |  |
Jean Beunardeau | — | — | 2,164,631 | 2,285,682
Directors elected by the employees |  |  |  |
Irina Aggelidakis 2,3 | 41,400 | 53,820 | — |
Ludovic Bénard 2,4 | 47,852 | 5,072 | — |
Elisabeth Moussi 2,4 | 41,400 | 4,485 | — |
Pascale Peluso 2 | 41,400 | 53,820 | — |
Emmanuelle Vigneron 2,3,5 | — | 55,787 | — |
Directors not performing executive duties within the HSBC Group 7 |  |  |  |
Paule Cellard 7 | 55,650 | 45,500 | — |
Pablo Forero 8,9 | 15,478 | 85,274 | — |
Deirdre Hannigan 10 | 46,216 | 196,945 11 | — |
Kerstin Lopatta 12 | — | 19,620 | — |
Stephen O'Connor 6 | 262,420 13 | 132,917 14 | — |
Dominique Perrier 6 | 49,700 | 63,000 | — |
Arnaud Poupart-Lafarge 6 | 49,000 | 61,600 | — |
Lucile Ribot | 61,950 | 63,000 | — |
Eric Strutz 6 | 247,438 15 | 306,797 16 | — |
Carola von Schmettow 17 | 43,600 | 14,170 | — |
Michaël Trabbia | 49,700 | 63,000 | — |

1 Fixed and other fixed remuneration, variable remuneration and benefits in kind.
2 Renounced remuneration to the benefit of a trade union organisation, net of social contributions.
3 End of Directorship on 25 September 2025.
4 End of Directorship on 6 February 2024.
5 Appointed on 6 February 2024.
6 End of Directorship on 24 March 2025.
7 Amounts paid net of social contributions, income tax prepayment, and, where applicable, withholding tax.
8 Appointed on 6 October 2023.
9 End of Directorship on 13 May 2025.
10 Appointed on 30 June 2023.
11 Of which EUR 113,360 paid by HSBC Continental Europe.
12 Appointed on 11 October 2024.
13 Of which EUR 51,012 paid by HSBC Continental Europe.
14 Of which EUR 66,272 paid by HSBC Continental Europe.
15 Of which EUR 92,432 paid by HSBC Continental Europe.
16 Of which EUR 117,720 paid by HSBC Continental Europe.
17 End of Directorship on 25 March 2024.

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Duties and procedures of the Board of
Directors
The Board internal rules govern the Board’s functioning and include
the main duties under the Board’s responsibility. The Board's
functioning takes into account HSBC Continental Europe’s position as
a 99.9 per cent held subsidiary of the HSBC Group. Under its internal
rules, the Board:
– constructively challenges the strategy and determines strategic
orientations, on the basis of the strategy formulated by General
Management, and oversees and monitors their implementation. It
approves strategic investments / divestments and all transactions
liable to impact earnings significantly;
– oversees and monitors management decision-making and actions
and provides effective oversight of the effective managers and
constructively challenges and critically reviews proposals and
information provided by the effective managers, as well as their
decisions;
– approves the financial resource plan;
– oversees and monitors that HSBC Continental Europe’s strategic
objectives, organisational structure and risk strategy, including its
risk appetite and risk management framework, as well as other
policies (e.g. remuneration policy) and the disclosure framework are
implemented consistently;
– monitors and supervises major risks and reviews regular risk
management reports, setting out the risks involved in the HSBC
Continental Europe’s business and results;
– monitors that the risk culture is implemented consistently;
– sets HSBC Continental Europe’s values and principles and oversees
the implementation and maintenance of a code of conduct or similar
and effective policies to identify, manage and mitigate actual and
potential conflicts of interests;
– oversees the integrity of financial information and reporting, and the
internal control framework, including an effective and sound risk
management framework;
– ensures that the heads of internal control functions, namely the
Chief Risk Officer, the Chief Compliance Officer and the Head of
Internal Audit, are able to act independently and, regardless of the
responsibility to report to other internal bodies, business lines or
units, can raise concerns and warn the Board where necessary
when adverse risk developments affect or may affect the institution;
– monitors the implementation of the internal audit plan;
– deliberates on all questions pertaining to its legal and regulatory
obligations and those stemming from its Articles of Association; and
– cares about HSBC Group's reputation in Continental Europe.
In the week prior to the meeting, the Directors receive the meeting
file, including the agenda, the draft minutes of the previous Board
meeting and supporting papers to the agenda items to be discussed
at the meeting. When certain items are of high confidentiality or
cannot be disclosed in advance, the necessary documents are
provided immediately before or during the meeting. Furthermore,
Directors are regularly advised of significant events regarding the
Company and receive the relevant documents.
Board of Directors’ work
The Board of Directors met 14 times during 2025. The average
attendance rate was 86 per cent, compared to 13 meetings with an
average attendance rate of 91 per cent in 2024:
– 7 February 2025 (attendance rate: 100 per cent);
– 18 February 2025 (attendance rate: 80 per cent);
– 28 March 2025 (attendance rate: 92 per cent);
– 29 April 2025 (attendance rate: 100 per cent);
– 14 May 2025 (attendance rate: 83 per cent);
– 27 June 2025 (attendance rate: 83 per cent);
– 11 July 2025 (attendance rate: 83 per cent);
– 18 July 2025 (attendance rate: 100 per cent);
– 29 July 2025 (attendance rate: 75 per cent);
– 14 August 2025 (attendance rate: 58 per cent);
– 16 September 2025 (attendance rate: 83 per cent);
– 23 October 2025 (attendance rate: 91 per cent);
– 19 November 2025 (attendance rate: 91 per cent); and
– 2 December 2025 (attendance rate: 82 per cent).
Businesses and strategy
Throughout 2025, the Board maintained a strong focus on the
strategic direction of HSBC Continental Europe. At each quarterly
meeting, the Board reviewed the performance, strategic initiatives,
and the progress of transformation and restructuring activities,
ensuring the current and future sustainability of the business model.
The Board was supported by regular updates on geopolitical and
macroeconomic developments and detailed presentations on specific
parts of the business to ensure a proper oversight. The Strategy
Forum, established in 2024, continued to inform the Board’s
deliberations on strategic matters.
Throughout 2025, the Board continued to take decisions to build a
leaner, simpler bank with a sharper strategic focus and an ambition to
grow. The main decisions included the following:
– on 14 May 2025, the Board approved developments for HSBC
Continental Europe that reflected the acceleration of the
implementation of HSBC’s strategy aimed at simplifying the
organisation to make it more agile, bringing together Commercial
Banking and Global Banking and Markets activities. In France, this
project involved a ‘Plan de Sauvegarde de l’Emploi‘ (social plan)
including a voluntary scheme;
– in accordance with the terms of the sale of the retail banking
operations on 1 January 2024, HSBC Continental Europe retained a
portfolio of EUR 7.1 billion at the time of sale, consisting of home
and certain other loans. Further to the approval given in December
2024 to sell this retained portfolio, the Board approved its disposal
to a consortium comprising Rothesay Life Plc and CCF on 27 June
2025;
– following a strategic review of the Securities Services business in
Germany, the Board approved on 27 June 2025, the disposal of the
custody business in Germany to BNP Paribas, subject to customary
regulatory and anti-trust approvals and conclusion of negotiations
with the works council in Germany. On 11 July 2025, the Board
then approved the disposal of the fund administration business in
Germany, Internationale Kapitalanlagegesellschaft mbH (‘INKA’), to
BlackFin Capital Partners S.A.S. subject to regulatory and anti-trust
approvals and the conclusion of works council consultations;
– on 16 September 2025, following a strategic review, the Board
approved the disposal of the 70.03% shareholding held by HSBC
Continental Europe in HSBC Bank Malta p.l.c. to CrediaBank.
The Board paid particular attention to People risk and staff
engagement in the context of transformation.
The Board discussed on a regular basis the anticipated impact of
Article 21c of the sixth Capital Requirements Directive on HSBC
Continental Europe.
Technology
In 2025, the Board d evoted significant attention to technology related
topics, including the strategy and its execution, operational resilience,
and budget.
9 Details on related-party agreements are available on page 33.

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In addition to the presentations from management, regular updates
were provided by the Board member designated to oversee IT topics,
who reported on the execution of the technology strategy, IT budget,
and key technology risks at each quarterly meeting. The Board
reviewed the progress of major technology projects and monitored
the implementation of the technology roadmap to support business
transformation and regulatory compliance.
ESG
ESG remained a priority for the Board in 2025. The Board reviewed
the sustainability strategy, monitored climate-related and
environmental risks, and oversaw the double materiality assessment
process.
The Board member responsible for ESG topics, appointed in 2024,
continued to report to the Board on a regular basis, in particular on the
implementation of the Corporate Sustainability Reporting Directive
(CSRD).
People and Culture
In 2025, the Board discussed the People strategy and the Culture
plan,with a focus on employee engagement and the management of
human resources risks in the context of ongoing transformation.
Finance
At each of its quarterly meetings, the Board reviewed the financial
performance and balance sheet developments. For each period
considered, it heard the conclusions of the Statutory Auditors, who
were invited to attend all Board meetings. The Board approved the
half-yearly and annual financial statements and the related disclosures
and press releases.
The Board was informed of developments in tax related topics,
regulatory ratios, in particular capital, liquidity, solvency and leverage
ratios as well as projections on these matters and discussed the
capital and funding plans on a regular basis, including dividends. On
23 October 2025, the Board approved an interim dividend of EUR
281.5m in respect of 2025 financial year.
The Board also reviewed and approved the Internal Capital Adequacy
Assessment Process (‘ICAAP’) and the Internal Liquidity Adequacy
Assessment Process (‘ILAAP’) reports, and the stress testing
framework.
The Board reviewed and approved non-audit services rendered by the
Statutory Auditors as necessary.
Finally, the Board monitored the progress of work on recovery and
resolution planning and approved the recovery plan before its
submission to the European Central Bank.
Risk management
At each quarterly meeting, the Board reviewed the HSBC Continental
Europe group’s risk profile, including both financial and non-financial
risks.
For this purpose, it is supported in particular by the core risk reports
(risk map, top and emerging risks and risk appetite statement) and by
the reports from the Chief Risk Officer and the Chair of the Risk
Committee.
In addition, it reviewed updates to the risk management framework
and policies and reviewed certain risk appetite metrics and thresholds
during the year.
The Directors have also access to the Risk Committee’s supporting
documentation.
The Board reviewed and approved where necessary the annual
reports on internal control, on the organisation of the financial crime
internal control system, and on information and communication
technology submitted to the Autorité de contrôle prudentiel et de
résolution ('ACPR').
The work of Internal Audit, in particular the reports that were the
subject of an adverse rating and the evolution in the number of open
recommendations, as well as the resources of Internal Audit were
discussed regularly, in particular by the Audit Committee. In addition,
the Head of Internal Audit presented his annual report to the Board at
its meeting on 7 February 2025. The Board reviewed and approved
the Internal Audit Plan for 2026 at its meeting of 19 November 2025.
Regulatory environment and supervision
The Board received regular updates on the regulatory landscape and
how they were managed by HSBC Continental Europe.
In addition, the Board closely followed the engagement with the
supervisory authorities. The Board discussed the findings of their
assessments and inspection missions and monitored their
remediation.
Governance
The Board deliberated, notably on the basis of the work of its
Committees, on the various topics that fall under its responsibility, in
accordance with the laws and regulations in force, in particular with
regard to remuneration and assessment of the suitability of the
management body, composition of the Board and specialised Board
committees, appointment of key function holders, training of the
management body, management of conflicts of interests, Board
performance, and delegation of authority framework.
The Board also reviewed and approved the corporate governance
policies for which it is responsible. It also examined the updates of
the governance rules applying to HSBC Group entities (Subsidiary
Accountability Framework). On 19 November 2025, the Board
approved the Mapping of Duties, designed to address the
requirement of the sixth Capital Requirements Directive (CRD6).
The Board approved the reports of the Board of Directors to the
General Meeting and on corporate governance for the 2024 financial
year.
During the 2025 financial year, the Board authorised one new related-
party agreement relating to the sale of HSBC Assurances Vie (France).
The Board examined the agreements entered into and authorised by
the Board during previous financial years and whose execution has
continued, in accordance with Article L. 225-40-1 of the French
Commercial Code 9.
The work of the Board Committees was set out in regular, detailed
reports from their respective Chairpersons and was debated during
Board meetings. In this regard, the Board was kept informed at each
meeting about the main topics discussed, recommendations, and
points of action identified by the Committee.
Finally, at each Board meeting, a report was given on the action
points requested by the Board at previous meetings, with specific
presentations where necessary.

Board Committees
The Board is assisted by four specialised Committees: Audit
Committee, Risk Committee, Nomination and Corporate Governance
Committee and Remuneration Committee. Their duties are defined in
the Board’s internal rules.

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Audit Committee

Composition of the Audit Committee
Chairperson |
Deirdre Hannigan (independent) | Appointed in 2023
Members |
Pablo Forero (independent) | From 1 January 2025 until 13 May 2025
Kerstin Lopatta (independent) | Appointed in 2024
Dominique Perrier (independent) | From 2019 until March 2025
Lucile Ribot (independent) | Appointed in 2017 (Chair from 2022 to 2023)
Carol Sergeant (independent) | Appointed on 13 May 2025

Carol Sergeant was appointed as a Member of the Audit Committee
on 13 May 2025, replacing Pablo Forero, who resigned with effect on
the same day.
The Audit Committee members are highly qualified in banking,
financial, accounting, sustainability reporting and control areas, as
they serve or have in the past served as Audit Committee member,
Chief Financial Officer, Chief Risk Officer, including for banks, expert
with regulatory advisory bodies. Cross-membership of the Audit and
Risk Committees Chairs ensures an appropriate interaction between
both committees.
Audit Committee’s duties
The Audit Committee reports to the Board. The Committee oversees
and advises the Board on matters relating to the budget, financial
reporting, sustainability reporting, internal controls, capital and liquidity
ratios to support the Risk Committee, the dividend policy and capital
allocation, management of the Finance function and Internal Audit.
The Committee in particular reviews:
– the integrity of the financial statements and sustainability
disclosures, formal announcements and disclosures;
– the effectiveness of Internal Audit and the external audit process;
and
– the effectiveness of internal control systems, subject to input from
the Risk Committee.
The Committee and its Chair had the opportunity to meet the
Statutory Auditors and the Head of Internal Audit regularly, including
in private sessions to ensure that there are no unresolved issues or
concerns. In carrying out these tasks, the Committee may consult any
adviser or expert as it deems appropriate.
To give itself sufficient time to review the accounts before they are
reviewed by the Board, the Audit Committee meets a few days
before the Board insofar as possible.
Lastly, at the request of the HSBC Bank plc’s Audit Committee, the
HSBC Continental Europe’s Audit Committee Chairperson provides a
half-yearly certificate to the Audit Committee Chairman of HSBC Bank
plc, HSBC Continental Europe’s direct shareholder, confirming, in
particular, that the accounts were reviewed by the Committee and
that the internal control system appears to be appropriate.
Audit Committee’s work in 2025
The Audit Committee met six times in 2025, with an attendance rate
of 100 per cent, compared to six meetings with an attendance rate of
100 per cent in 2024:
– 6 February 2025;
– 17 February 2025;
– 22 April 2025;
– 16 July 2025;
– 28 July 2025; and
– 20 October 2025.
Each meeting was also attended by the Statutory Auditors, the Chief
Accounting Officer, the Head of Internal Audit and the Chief Risk
Officer. The Chief Executive Officer and the Deputy Chief Executive
Officers (one of whom is the Chief Financial Officer) also attended
Committee meetings to answer any questions. Other members of the
leadership team also attend Committee meetings covering any
subjects falling under their responsibility.
The first aspect of the Committee’s work involved an in-depth review
of the annual and half-yearly financial statements prior to their
presentation to the Board. The Audit Committee reviewed HSBC
Continental Europe's parent company and consolidated accounts, as
well as the publications relating to the annual results. The Committee
was informed by the Finance Department of the main accounting and
tax points of attention and discussed the choices made by the
Company in drawing up its financial statements and verified the
adequacy of provisions for identified risks, especially provisions for
credit risk.
The Committee paid attention in particular to HSBC Continental
Europe's capital adequacy, with the implementation of the Basel III
rules as well as in preparation for the anticipated impact of Article 21c
of CRD6.
At its meeting on 20 October 2025, the Committee endorsed and
recommended for the Board's approval the distribution of an interim
dividend (acompte sur dividende) relating to financial year 2025.
Throughout the year, the Committee remained attentive to monitoring
the cost base, including technology spend.
The Committee was informed of the Finance system strategy, with
the implementation of a new general ledger system in September
2025, and of changes in the organisation of the Finance department.
Regarding publications relating to the annual results, the Committee
reviewed with particular attention the non-financial disclosures under
the EU Taxonomy and CSRD, as well as the ESG part of Pillar 3
report.
The second area of the Committee’s work concerned controls. To this
end, the Statutory Auditors reported on matters requiring particular
attention at the time of preparing t he financial statements. Every
quarter, the Statutory Auditors presented th eir diligences on the
financial statements. The Committee discussed the Statutory
Audit ors’ audit programme and independence, approved the fees paid
in 2025 by t he HSBC Continental Europe group to its Statutory
Auditors. The Committee reviewed and authorised as necessary the
non-audit services rendered by the Statutory Auditors.
The Committee was also informed of the risks and results of controls
conducted on financial statements, in particular regarding the
deficiencies identified by these controls and progress in action plans.
The Committee monitored the whistleblowing setup and its results.
At its meeting on 20 October 2025, the Committee examined the list
of related-party agreements authorised previously by the Board and
still in force and made recommendations to the Board regarding the
list update.
The third aspect of the Committee work concerned the detailed
review, at each of its quarterly meetings, of Internal Audit activities.
At its meeting on 6 February 2025, it endorsed and recommended for
the Board's approval the appointment of a new Head of Internal Audit.
It further reviewed the findings of the main audit duties, notably those
calling for particular attention. The Committee remained extremely
attentive to the proper implementation of the audit recommendations
and to the evolution of the capabilities of Internal Audit. It has also
approved the 2026 annual audit plan.
Throughout 2025, the Committee received reports from the
subsidiaries' Chairs of Audit Committees.

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The Chairperson of the Audit Committee reported to the Board, on a
regular basis and when necessary, on the key points discussed during
Audit Committee meetings and on recommendations formulated by
the Audit Committee.
Risk Committee

Composition of the Risk Committee
Chairperson |
Pablo Forero Calderon (independent) | Appointed in 2023, Chairman from 1 January 2025 until 13 May 2025.
Carol Sergeant (independent) | Appointed on 13 May 2025 as Chairperson
Members |
Deirdre Hannigan (independent) | Appointed in 2023
Monika Rast (independent) | Appointed on 24 March 2025
Eric Strutz (independent) | From 2022 until 24 March 2025 (Chairman from 2022 until 31 December 2024)
Michaël Trabbia (independent) | Appointed in 2022

On 1 January 2025, Pablo Forero was appointed as Chairman,
succeeding Eric Strutz, who remained a Member until 24 March 2025.
On 13 May 2025, Carol Sergeant was appointed as Chairperson,
succeeding Pablo Forero, who resigned with effect on the same day.
The Committee members are highly qualified in the banking, financial,
risk, including technology, and internal control areas, as they serve or
have in the past served in the capacity of Group Chief Risk Officer,
Group Chief Financial Officer, Chief Executive Officer, including of
banking entities, have had senior supervisory responsibilities within a
banking authority or operational responsibilities within Global Banking
activities or have been Risk Committee Chair or Head of Innovation
and Technology.
Cross-membership of the Audit and Risk Committees Chairs allows to
ensure an appropriate interaction between both committees.
Risk Committee’s duties
The Risk Committee reports to the Board. The Committee oversees
and advises the Board on risk-related matters and enterprise risks
impacting HSBC Continental Europe and its subsidiaries, including risk
governance.
The Committee collaborates with other Board Committees whose
activities may have an impact on the risk strategy (in particular, Audit
and Remuneration Committees) and regularly communicates with the
HSBC Continental Europe’s internal control functions, in particular the
risk management function.
The Committee meets the Chief Risk Officer in private at least twice
per year to ensure that there are no unresolved issues or concerns. In
carrying out these tasks, the Committee may consult any adviser or
expert as it deems appropriate.
At the request of the HSBC Bank plc’s Risk Committee, the HSBC
Continental Europe’s Risk Committee Chairman provides a half-yearly
certificate to the Risk Committee Chairman of HSBC Bank plc,
confirming, in particular, that the Committee examined the reports on
risks and that no matter was brought to its attention other than those
described in the supports.
Risk Committee’s work in 2025
The Risk Committee met eight times in 2025,with an attendance rate
of 100 per cent, compared to six meetings with an attendance rate of
96 per cent in 2024:
– 6 February 2025;
– 18 March 2025;
– 22 April 2025;
– 18 June 2025;
– 17 July 2025;
– 15 September 2025;
– 20 October 2025; and
– 2 December 2025.
Each meeting was also attended by the Statutory Auditors, the Chief
Risk Officer and the Head of Internal Audit. The Chief Executive
Officer and the Deputy Chief Executive Officers (one of whom is the
Chief Financial Officer) attended Committee meetings to answer any
questions. Other members of the leadership team also attend
Committee meetings for subjects falling under their responsibility.
At the end of its quarterly meetings, the Risk Committee held
regularly in camera sessions without HSBC Continental Europe
management attending and, if applicable, with the Head of Internal
Audit or the Chief Risk Officer only.
In 2025, the Committee paid particular attention to the risks relating
to HSBC Continental Europe's transformation projects. Liquidity
management, models, data and cybersecurity were also particularly in
the focus of the Committee, which continued monitoring the
geopolitical and economic context.
In line with its usual work, the Committee approved HSBC
Continental Europe’s risk appetite for 2025 and examined, at each of
its meetings, the monitoring dashboard, in particular indicators which
were not in line with the thresholds that had been set. It also
reviewed and approved the risk tolerance framework.
In addition to a summary on risks given by the Chief Risk Officer, the
Committee monitored, at each of its quarterly meetings, the risk
profile of HSBC Continental Europe through the risk map and the
review of top and emerging risks, as well as their assessment and the
action plans which had been identified.
The Committee was informed of the changes to the risk management
framework.
At each quarterly meeting, the Committee received reports on
specific lines of business or subsidiaries from Heads of those areas or
Chief Risk Officers and from Chairs of subsidiaries’ Risk Committees.
The Committee carefully monitored the stress tests performed in
2025, in particular the EBA stress test exercise, discussing stress
assumptions, reviewing and benchmarking results, and assessing
lessons learned.
The Risk Committee also continued to carry out the usual review of
financial risks, each of the individuals in charge of controlling such
risks reported to the Committee, in particular concerning:
– Credit risk, with reviews of the whole portfolio and of targeted
sectors, including leveraged exposures, monitoring changes in
outstanding credit and non-performing loans, the evolution of the
cost of risk and of worrying exposures. The Committee was
informed of the communications with the supervisory authorities on
credit;
– Market risk, in particular in the volatile context of the first half of
2025 further to the announced US renegotiation of tariffs, with
reviews of trends compared with limits, changes in exposure, the
setting of limits, changes in market activities’ risk-weighted assets
and the results of internal stress tests. Particular attention was also
paid to the evolution of spreads on the French and other sovereign
debts; and
– Liquidity, capital and interest rate in the banking book risks. The
Committee examined and approved the ICAAP and ILAAP reports,
as well as the capital and liquidity plans and their execution
afterwards. The Committee paid particular attention to the
management of liabilities, in the context of HSBC Continental
Europe's evolving refinancing model.
Likewise, at each meeting, the Risk Committee continued to carry out
a review of non-financial risks, each of the individuals in charge of
controlling such risks reported to the Committee, in particular
concerning:

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– Risk models, in particular with the monitoring of progress made in
the remediation programmes further to reviews on models
performed by supervisory authorities, as well as their impact on risk-
weighted assets;
– Data management, regarding HSC Continental Europe's compliance
with the Basel Committee on Banking Supervision's standard
number 239 (BCBS 239), and more broadly regarding the
management of data across HSBC Continental Europe;
– Operational incidents and losses, progress and action plans relating
to the non-financial risks management framework;
– Resilience risk and HSBC Continental Europe's implementation of
the Digital Operational Resilience Act (DORA). Particular attention
was devoted to cybersecurity and business continuity, as well as to
cybersecurity in relation with outsourcing risk;
– IT and technology risk, with a focus on the execution of IT
transformation projects;
– Compliance risk (see below);
– ESG risks, with a growing awareness of Nature risks, although
these remain difficult to assess;
– Legal risks, including legal disputes and emerging risks; and
– People risks in the context of social plans in France and Germany in
particular.
With regard to both financial and non-financial risks, the Committee
was informed of the impact of climate-related and environmental risks
weighing on these risks.
In accordance with the French Government Order of 3 November
2014 as modified, the Committee was informed of the changes to the
management framework for outsourced services, in particular those
deemed essential, whether these services be sub-contracted within
the HSBC Group or to external suppliers, as well as the results of
controls carried out on outsourced essential services.
In the area of compliance risk management, the Committee took note
of the quarterly reports, which set out the main new matters and
updated on those already detailed in the course of previous meetings.
The Committee closely followed the evolution of the transaction
monitoring, the system and tools, the implementation of
recommendations issued by the various control bodies in terms of
compliance, as well as missions carried out by the latter in these
areas. In particular, the Committee reviewed the outcome of
supervisory inspections of the Compliance function.
The Committee approved the annual reports to the ACPR on internal
control and on the organisation of the financial crime compliance
framework.
The Committee was informed of communications with supervisory
and control authorities and of the conclusions of their various
assessments, audits and reviews, and received reports and follow-up
letters and replies to them in relation to these assignments, as well as
action plans initiated to implement their recommendations.
The Committee was informed of the works performed by HSBC
Continental Europe regarding recovery and resolution planning carried
out as part of the HSBC Group's obligations towards the Prudential
Regulation Authority or of its own obligations towards the ECB and
the Single Resolution Board. In particular, the Committee examined
the draft recovery plan.
In relation to other governance matters, the Committee reviewed the
remuneration policy.
The Chairperson of the Risk Committee reported, on a regular basis
and when necessary, on the key points discussed during Risk
Committee meetings and on recommendations formulated by the
Risk Committee.
Joint sessions of the Audit and Risk
Committees
The Audit Committee and the Risk Committee held two joint sessions
on 17 July and 19 November 2025, with 100 per cent attendance
rates, to review, endorse and recommend for the Board's approval in
July the Local Risk Management Framework, and in November the
draft budget, the draft capital and funding plans, the annual update of
the Risk Appetite Statement and the draft Internal Audit plan for 2026,
as well as an recovery and resolution planning update. Further, at the
July session, the Committees reviewed the Internal Audit Report and
progress on the Permanent Control Plan. And at the November
session, the Committees reviewed the Internal Audit Function
Review, papers pertaining to models and data and the 2030 forecast
on Technology Costs.
Nomination and Corporate
Governance Committee

Composition of the Nomination and Corporate Governance Committee
Chairperson |
Deirdre Hannigan (independent) | Appointed on 24 March 2025 as Chairperson
Arnaud Poupart-Lafarge (independent) | From 2022 until 24 March 2025 (Member from 2020 to 2022)
Members |
Jean Beunardeau | Appointed in 2021
Pablo Forero (independent) | From 24 March 2025 until 13 May 2025
Xavier Martiré (independent) | Appointed on 24 March 2025
Stephen O'Connor (independent) | From 2022 until 24 March 2025
Carol Sergeant (independent) | Appointed on 13 May 2025

On 24 March 2025, Deirdre Hannigan was appointed as Chairperson,
succeeding Arnaud Poupart-Lafarge.
Further to a decision of the Board, the Nomination and Corporate
Governance Committee has comprised the Chairs of the Board and of
the other Board Committees since 24 March 2025.
In accordance with the Governance rules applicable to the HSBC
Group entities, at least half of the Nomination and Corporate
Governance Committee’s membership are independent non-
executive, non-employee Directors.
Nomination and Corporate Governance
Committee’s duties
The Nomination and Corporate Governance Committee reports and is
accountable to the Board. The Committee is responsible for:
– Regularly reviewing the composition of the Board and Board
Committees and leading the process for nomination to the Board of
Directors and Board Committees;
– Overseeing the planning and candidates assessment process to
ensure succession plans are in place for the Board and General
Management;
– Overseeing the process of assessing the individual and collective
suitability of the Board of Directors, the Board Committees and the
General Management;
– Overseeing the process by which the Board, its Committees and
individual Directors assess their effectiveness; and
– Overseeing the application of the governance framework of the
HSBC Group for its subsidiaries.
In carrying out these tasks and responsibilities, the Committee may
consult any adviser or expert as it deems appropriate.

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Nomination and Corporate Governance
Committee’s work in 2025
The Committee met six times in 2025, with an attendance rate of
100 per cent, compared to four meetings with also an attendance rate
of 100 per cent in 2024. In addition, endorsements were also sought
from the Committee by circulation during the year.
Its main work comprised:
– the monitoring of the individual and collective suitability of the
management body pursuant to the suitability assessment policy and
assessments and reassessments required by the criteria defined in
this policy;
– succession plans for the Board, the Executives and criticial roles,
including the ongoing selection process of a new CEO;
– the identification process of new Independent Non-Executive
Directors that led to proposing to the Board the appointment of
three Independent Non-Executive Directors;
– the composition of the Board Committees;
– the Board effectiveness review;
– the time commitment expected from Non-Executive Directors;
– the follow-up of interactions with supervisors and their
recommendations, on topics falling under the Committee's
responsibility;
– the follow-up of the implementation of findings raised by Internal
Audit on corporate governance;
– examining the revision of governance rules applying to the HSBC
Group entities (Subsidiary Accountability Framework) and the
compliance of HSBC Continental Europe with it;
– reports from chairs of nomination committees of certain
subsidiaries, review of the succession plans of the main subsidiaries
of HSBC Continental Europe and endorsing appointments to these
boards;
– the review of the updated register of potential situations of conflict
of interest, and of the results of the controls in place regarding
potential conflict of interest situations;
– the review of the first part of the report on corporate governance for
the 2024 financial year;
– the review and proposals to the Board for updating the Board
policies relating to topics falling under the Committee's
responsibility;
– the review of the impacts of CRD6 requirements relating to
corporate governance topics and the monitoring of their
implementation; and
– the review of the reporting on diversity to be submitted to the ACPR
for the first time as per instruction 2024-I-14.
The Chair of the Nomination and Corporate Governance Committee
reported to the Board on its work regularly and when necessary. All of
the Committee’s work was submitted to the Board for approval.
Remuneration Committee

Composition of the Remuneration Committee
Chairman |
Xavier Martiré (independent) | Appointed on 24 March 2025 as Chairman
Arnaud Poupart-Lafarge (independent) | Appointed in 2022 until 24 March 2025 (Member from 2020 to 2022)
Members |
Pablo Forero (independent) | Appointed in 2024 until 13 May 2025
Pascale Peluso | Appointed on 23 October 2025
Carol Sergeant (independent) | Appointed on 13 May 2025
Emmanuelle Vigneron | Appointed in 2024 until 25 September 2025

On 24 March 2025, Xavier Martiré was appointed as Chairman,
succeeding Arnaud Poupart-Lafarge.
In accordance with the Governance rules applicable to the HSBC
Group entities, at least two members of the Remuneration
Committee are independent non-executive Directors. In addition, one
of the Directors elected by the employees is a member of the
Remuneration Committee.
Remuneration Committee’s duties
The Remuneration Committee has non-executive responsibility for
matters related to remuneration and advises the Board on these
matters. In exercising this responsibility, it is responsible for:
– supporting the Board in overseeing the implementation and
operation of the compensation framework in place for HSBC
Continental Europe’s remuneration in conjunction with that of the
HSBC’s Group, as approved by the Group Remuneration Committee
and with regulatory requirements;
– ensuring this framework does not contravene any local regulations;
– ensuring this framework is aligned with risk appetite, strategy,
culture and values, and long-term interests of HSBC Continental
Europe; and
– ensuring this framework is appropriate in order to attract, retain and
motivate people with the qualities required to contribute to the
success of HSBC Continental Europe.
The Committee collaborates with other Board committees whose
activities may have an impact on the design and proper functioning of
remuneration policies and practices (in particular, the Risk
Committee). For this purpose, the Chair of the Risk Committee is a
member of the Remuneration Committee.
The Committee’s recommendations on the remuneration of the
members of the Management Body in its management function are
presented to the Board after prior approval by the Remuneration
Committee of HSBC Holdings plc or are then submitted for approval.
Moreover, in carrying out these duties and responsibilities, the
Committee may consult any adviser or expert as it deems
appropriate.
Remuneration Committee’s work in 2025
The Remuneration Committee met three times in 2025 with an
attendance rate of 100 per cent, compared to twice in 2024 with an
attendance rate of 100 per cent. In addition, endorsements were also
sought from the Committee by circulation during the year. Its main
work comprised:
– the review of the general remuneration policy, taking into account
regulations concerning compensation, in particular
– the process to identify the material risk takers,
– the feedback or findings from the supervisors and the second and
third lines of defence,
– risk control and the contribution of the Risk and Compliance
functions to the process for determining variable compensations,
– the review of the identified cases of employees, as not entirely
complying with the risk and compliance rules and impacts on their
remuneration,
– the review of the rules and remuneration for employees defined as
risk takers;
– the review of the 20 highest remunerations in respect of the 2024
year;
– compensation proposals for the Chief Risk Officer, the Chief
Compliance Officer and the Head of Internal Audit;
– proposals to approve, in agreement with HSBC Holdings plc, the
terms of the remuneration of Andrew Wild, Christopher Davies and
Joseph Swithenbank and setting out the fixed and variable elements
of their remuneration and the number of shares to be awarded to
them (see section ‘Executives’ compensation’);

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– reports from chairs of remuneration committees of certain
subsidiaries, and review of the remuneration of the Directors of
certain subsidiaries;
– the review of the section of the corporate governance report on
remuneration; and
– the review of the Committee's effectiveness and terms of
reference.
The Chair of the Remuneration Committee reported to the Board on
its work and on recommendations formulated by the Committee. All
of the Committee’s work was submitted to the Board for approval.

General Management
Since 2007, HSBC Continental Europe’s Board of Directors has
chosen to separate the functions of Chairman of the Board and Chief
Executive Officer. This choice has been maintained since then and is
furthermore in compliance with regulatory obligations for credit
institutions.
Organisation of the General
Management
General Management leads the Company and acts as its
representative vis-a-vis third parties. In 2025, the General
Management comprised three Effective Managers ("Dirigeants
effectifs" or "Executives"), i.e. the Chief Executive Officer, Andrew
Wild, who was assisted by two Deputy Chief Executive Officers
("Directeurs Généraux Délégués"), Christopher Davies and Joseph
Swithenbank. They form the Management Body in its management
function.
Andrew Wild stepped down from his roles as Chief Executive Officer
and Director of HSBC Continental Europe on 31 December 2025.
Christopher Davies was appointed as Chief Executive Officer ad
interim from 1 January 2026, until the appointment of a new Chief
Executive Officer. Joseph Swithenbank remains Deputy Chief
Executive Officer.
Chief Executive Officer’s powers
The Chief Executive Officer has the widest powers to act on the
Company’s behalf in all circumstances within the limits of its
corporate object, and subject to those powers expressly conferred by
law on the collective body of shareholders and on the Board of
Directors. At present, there are no specific restrictions on the Chief
Executive Officer’s powers set by the Board or by the Articles of
Association, but decisions involving the strategic orientation of the
Company's activities and investments/divestments are submitted to
the Board of Directors for approval according to the Board Internal
rules.
Furthermore, the Board of Directors has delegated powers to issue
bonds to Andrew Wild (Chief Executive Officer), Christopher Davies
(Deputy Chief Executive Officer), Joseph Swithenbank (Deputy Chief
Executive Officer) and a certain number of HSBC Continental Europe
Markets officers.
The current Delegation of Authorities Framework was put in place
across the HSBC Group in 2023 and was amended on an annual basis
since then. Moreover, a person with delegated powers may not
individually commit HSBC Continental Europe to sums above EUR 1.5
million. There are specific delegated powers concerning credit and
market risk.
Presentation of the members of
General Management as of 1 January
2026

Christopher Davies Chief Executive Officer ad interim

Principal position: Chief Executive Officer ad interim, HSBC
Continental Europe.
Other directorship in the HSBC Group: Director, HSBC Bank
Bermuda Limited.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive.
Skills and experience: Born in 1962. British nationality. Masters (MA)
degree in French and German literature and languages from the
University of Oxford and graduate of the Chartered Institute of
Bankers. Since he joined HSBC in 1985, he has served in various
senior roles across the main HSBC's major business lines, principally
in the United Kingdom, the United States and China. Thus, he was
Head of Commercial banking North America from 2007 to 2011 then
Deputy Chief Executive Officer of HSBC Bank (China) Company
Limited from 2011 to 2013. from 2013 to 2020, he has been Chief
Executive Officer International Europe of HSBC Bank plc. He was
appointed as Deputy Chief Executive Officer of HSBC Continental
Europe in 2019, and Head of Transformation in 2021. Since 1 January
2026, he has been Chief Executive Officer ad interim, until the
appointment of a new Chief Executive Officer.

2024 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Director: HSBC Bank Bermuda Limited.
2023 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited.
2022 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited.
2021 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited, HSBC Europe B.V, Midcorp Limited.

Joseph Swithenbank Deputy Chief Executive Officer ("Directeur Général Délégué")

Principal position: Deputy Chief Executive Officer and Chief
Financial Officer, HSBC Continental Europe.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive.
Skills and experience: Born in 1984. US and British nationalities.
MBA from London Business School and B.S. Accounting & Finance
from Wake Forest University (North Carolina, USA). He was appointed
as Deputy Chief Executive Officer of HSBC Continental Europe on
1 March 2024, in addition to his role as Chief Financial Officer that he
has held since January 2021. Prior to this role, he was Global Head of
Business Performance for Commercial Banking from 2017 to 2021.
Before joining HSBC, he spent 12 years at General Electric, most
recently as Financial Controller for GE Capital International. He also
held positions in audit, treasury and operational finance at General
Electric in the US and Europe.

2024 | Directorship in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe.
2023 | –
2022 | –
2021 | –

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Operating Committee
The General Management is assisted by an Operating Committee
(which replaced the Executive Committee from 16 September 2025),
whose membership was as follows as at 1 January 2026:

Christopher Davies | Chief Executive Officer ad interim
Joseph Swithenbank | Deputy Chief Executive Officer, Chief Financial Officer
Marwan Dagher | Head of Markets and Securities Services
Guillaume Duguet | Chief Operating Officer
Frank Ehrlich | Head of Capital Markets & Advisory ad interim
Eric Emoré | Head of International Wealth and Premier Banking and Head of Transformation
Geoffrey Fichte | Chief Executive Officer, Malta
Gavin MacLean | Head of Global Payments Solutions
Fredun Mazaheri | Chief Risk Officer
Camille Olléon | Head of People
Antoine Pfister | Chief Compliance Officer
Gerd Pircher | Interim Head of Global Trade Solutions and CEO Italy
Michael Schleef | Chief Executive Officer, Germany
Anna Tavano | Head of Banking

Every year, HSBC Continental Europe reviews succession plans for
Operating Committee members and roles considered as key with
clear rules guiding this exercise in order to have robust succession
plans, promoting gender balance as well as internal promotion. It is
required to have at least one emergency successor and a female
successor for each of these roles. The succession plans were
reviewed in 2025 on these bases, including in respect of the
members of the Operating Committee. Additional information on the
diversity policy are available in the chapter on Sustainability on page
46.

Additional information
Agreements governed by article
L. 225-38 of the French Commercial
Code
Article L. 225-38 of the French Commercial Code requires that any
agreement entered into directly or indirectly between a company and
its Chief Executive Officer or one of its Directors or Deputy Chief
Executive Officers, or between a company and one of its
shareholders owning at least 10 per cent of the voting rights, or, in
the case of a corporate shareholder, the company which controls it,
must first be authorised by the Board of Directors and subsequently
approved at the Annual General Meeting of shareholders. It also
prohibits certain types of agreements between those parties, such as
loans or guarantees.
During its meeting on 23 October 2025 the Board conducted its
annual review of agreements already entered into that it had
authorised previously and which are still in force.
Agreement authorised in 2025
As part of the disposal of HSBC Assurances Vie (France) to Mutuelle
Assurance des Travailleurs Mutualistes, one new agreement subject
to the provisions of article L. 225-38 of the French Commercial Code
was approved by the Board of Directors of HSBC Continental Europe
on 28 March 2025. It relates to a corporate income tax consolidation
exit agreement between HSBC Assurances Vie (France) and HSBC
Bank plc acting through its Paris Branch, in the presence of HSBC
Continental Europe and Mutuelle Assurance des Travailleurs
Mutualistes also parties to the agreement. This agreement was
entered into on 31 October 2025.
Agreements entered into in prior years and
still in force and effect during 2025
– the agreements between HSBC Continental Europe and its direct
99.99 per cent shareholder, HSBC Bank plc through its Paris Branch,
namely: an agreement for the provision of services covering various
activities and a group tax integration agreement, entered into in
2001;
– the agreement renewed in 2015 between HSBC Holdings plc and
HSBC Continental Europe, granting HSBC Continental Europe and
its subsidiaries use at no charge of the HSBC brand;
– the indemnity agreement entered into in 2019 between HSBC
Continental Europe and HSBC Bank plc and HSBC UK Bank plc in
order to cover HSBC Bank plc and HSBC UK Bank plc for any
amount that they may have to pay under obligations in which they
remain debtors to the beneficiaries, that is clients having entered
into a relationship with HSBC Continental Europe as HSBC Bank plc
and HSBC UK Bank plc would no longer be authorised to provide
certain international trade instruments and services to companies
located in the European Economic Area after the exit of United
Kingdom from the European Union;
– the agreement (Side Letter), entered into in 2021, by HSBC
Continental Europe with HSBC Global Services (Hong Kong)
Limited, HSBC Global Services (UK) Limited, HSBC Group
Management Services Limited, HSBC Global Services Limited, and
HSBC Service Delivery (Polska) sp. z o.o. and in which HSBC
Holdings plc, a company controlling HSBC Bank plc, shareholder
company of HSBC Continental Europe and owning more than 10 per
cent of the voting rights, is indirectly interested. This agreement
relates to the pre-payment by HSBC Continental Europe to five
ServCo HSBC Group entities of four months' charges for the
services provided, in order to meet contingency funding
requirements to ensure Operational Continuity in Resolution
('OCiR'). The purpose of the contingency funding is to ensure the
availability of sufficient financial resources in the Group’s Services
Companies to safeguard the provision of services that the HSBC
Group relies on throughout a stress or resolution event;
– the Domination and Profit and Loss Transfer Agreements entered
into in 2023 between HSBC Continental Europe and HSBC Trinkaus
& Burkhardt GmbH relating to the acquisition of 100 per cent of
HSBC Trinkaus & Burkhardt GmbH by HSBC Continental Europe
S.A., Germany from HSBC Bank plc;
– the Domination and Profit and Loss Transfer Agreements entered
into in 2023 between HSBC Continental Europe and HSBC Service
Company Germany GmbH relating to the acquisition of 100 per cent
of HSBC Service Company Germany GmbH by HSBC Continental
Europe S.A., Germany from HSBC Trinkaus & Burkhardt
Gesellschaft für Bankbeteiligungen GmbH; and
– the reactivation from 2021 of the employment agreement of Jean
Beunardeau, Chairman of the Board, which had been suspended
since his appointment as Deputy Chief Executive Officer in 2010.
Additional information about the
members of the management body
Ethics
The policy of the management body on conflicts of interests annexed
to the Board’s internal rules covers situational and transactional
conflicts of interests and includes in particular a list of questions to
assist the Directors in identifying situations of conflicts of interests,
examples of situations that may or may not give rise to a conflict of
interest, a procedure dealing with the declaration of a potential
conflict of interests, a procedure to guide the Board when considering
such a declaration, as well as mitigating measures and controls
regarding identified situations of potential conflicts of interests.

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In order to strengthen the conflict of interests avoidance mechanism,
Directors must seek authorisation from the Board before accepting a
mandate or position in a company or organisation outside the HSBC
Group and a process of authorisation, review and possible withdrawal
of authorisation by the Board is in place.
Situations of potential conflicts of interests between the duties of the
members of the management body with respect to HSBC Continental
Europe and their private interests and/or other duties are appropriately
managed through mitigating measures whose effectiveness is
controlled half-yearly.
To the knowledge of HSBC Continental Europe, there is:
– no family relationship between the members of the management
body of HSBC Continental Europe; and
– no arrangement or understanding with a shareholder, a customer, a
supplier or other pursuant to which one of the members of the
management body was selected.
Absence of convictions
To the knowledge of HSBC Continental Europe, in the last five years,
none of the members of the management body have been the
subject of a conviction for fraud, bankruptcy, receivership, liquidation
or put into administration, official public incrimination and/or sanction
pronounced by statutory or regulatory authorities, or have been
disqualified by a court from acting as a member of an administrative,
management or supervisory body of an issuer or from acting in the
management or conduct of the affairs of an issuer.
Shareholders’ general meeting
Meetings are open to all shareholders. They are convened and
transact business in accordance with the provisions of the law and
regulations in force.
According to article 21 of the Articles of Association, all shareholders,
whatever the number of shares they own, are entitled to attend
General Meetings and to take part in the deliberations, personally or
through a representative, provided their shares are paid up in full for
payments that are due and are registered on an account in their own
name no later than midnight, Paris time, on the second business day
preceding the General Meeting. However, the author of the notice to
attend has the option at all times to reduce this period of time, as he
sees fit.
All shareholders can also vote by correspondence using a form which
can be sent to them in accordance with the conditions specified by
the notice to attend the Meeting.
The Board of Directors can decide that shareholders will be allowed to
take part and vote in all General Meetings by video conference or by
any means of telecommunications making it possible to identify them
in accordance with the applicable legal and regulatory provisions.

Delegations given by the Shareholders’ meeting to increase the share capital |
| With pre-emptive rights
Issue of shares for cash or by capitalising reserves |
Date of authority | 25 March 2024
Expiry date | 25 May 2026
Maximum nominal amount | EUR 500 million
Used amount | EUR 0 million

Compensation
Compensation and benefits of members of the management body in its
management function
Remuneration package
The remuneration of the members of the management body in its
management function (the 'Executives') is adopted each year by the
Board of Directors upon the recommendation by the Remuneration
Committee, and approved by the Remuneration Committee of HSBC
Holdings plc. It includes a fixed component and a variable component.
The fixed component is determined considering external market
practices with the help, if needed, of specialist consulting firms and
HSBC Group internal benchmarks.
The variable component is determined in particular on the basis of the
overall variable pay pool and according to the individual performance
of the 'member of the management body' measured annually and
based on completion of objectives embedded in a balanced
scorecards and supported by a set of indicators. There are financial
indicators focused on revenues growth, costs control, return on
tangible equity ('RoTE'), customers deposits, loans, non-financial
indicators linked to sustainability related risks as carbon path
reduction at HSBC Continental Europe level and for our clients,
development of sustainable finance or more generally related to risk
management as audits follow up, control of operational risks,
appropriate application of conduct principles and few qualitative
indicators such as successful achievement of reorganization projects,
customer satisfaction, improvement of data quality, increase of
employees' engagement index, improvement of inclusion index and
of attrition of high performers, etc.
In parallel the variable component also takes account of market trends
and, if necessary, changes in regulations. In accordance with
regulation, this variable component is paid partly in non-deferred and
partly in deferred remuneration and partly in cash and partly in shares.
Deputy Chief Executive Officer as Head of transformation and Deputy
Chief Executive Officer as Chief Financial Officer may also have
specific objectives related to their respective role.
Award of shares
In 2025, members of the management body benefited from the
allocation of shares in HSBC Holdings plc in accordance with the
HSBC Group’s general policy.
With respect to 2025, HSBC Continental Europe 'members of the
management body' received, as part of their variable remuneration,
Restricted Shares, for which the only criterion is to be with the
company at award date.
Supplementary pension scheme
The current and former members of the management body of HSBC
Continental Europe have a defined benefits supplementary pension
scheme. This plan guarantees members a pre-determined absolute
supplementary pension income based on their length of service. In
the event that the beneficiary dies, 60 per cent of this pension is
payable to the surviving spouse. It is increased every year in line with
the average rate applied to the French State pension scheme.
As at 31 December 2025, Andrew Wild had accrued pension rights
representing 5.2 p er cent of his 2025 fixed remuneration.
10 Tables numbers refer to table models provided by the Autorité des marchés financiers in its 10 December 2009, as amended lastly on 13 April 2015,
recommendation 2009-16 concerning the guide for compiling registration documents.

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Joseph Swithenbank had accrued pension rights representing 5.1 per
cent of his 2025 fixed remuneration. Christopher Davies is not entitled
to this pension scheme, since he takes benefit of a UK pension
schemes linked to its employment contract.
Remuneration
The remuneration of Andrew Wild as Chief Executive Officer of HSBC
Continental Europe, and of Christopher Davies and Joseph
Swithenbank as Deputy Chief Executive Officers of HSBC Continental
Europe are detailed on next pages.
The following information is published in accordance with the
provisions of article L. 225-102-1, paragraphs 1, 2 and 3 and article L.
225-184 of the French Commercial Code.It concerns remuneration
paid by HSBC Continental Europe, the companies it controls and the
companies that control it (the HSBC Group). The remuneration of the
members of the management body below is presented in accordance
with the Autorité des marchés financiers recommendations of
December 2009 10. Tables 4, 5 and 9 of this recommendation are not
applicable.
Summary of compensation awarded to each member of the management
body in its management function

Chief Executive Officer 1
| 2022 | 2023 | 2024 | 2025
| Compensation awarded in 2022 | Compensation awarded in 2023 | Compensation awarded in 2024 | Compensation awarded in 2025
| € | € | € | €
Andrew Wild |  |  |  |
Fixed remuneration | 573,300 | 573,300 | 623,300 | 623,300
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 326,700 | 326,700 | 376,700 | 406,700
Variable remuneration in cash | 125,811 | 200,000 | 259,211 | 259,211
Variable remuneration in shares 4 | 125,811 | 200,000 | 259,211 | 259,211
Deferred variable remuneration in cash 5 | 188,717 | 300,000 | 388,817 | 388,817
Deferred remuneration in shares without performance conditions 6 | 188,717 | 300,000 | 388,817 | 388,817
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | 14,638 | 15,328 | 15,574 | 15,863
Total | 1,543,694 | 1,915,328 | 2,311,630 | 2,341,918

Chief Executive Officer 1
| 2022 | 2023 | 2024 | 2025
| Compensation for 2022 | Compensation for 2023 | Compensation for 2024 | Compensation for 2025
| € | € | € | €
Andrew Wild |  |  |  |
Fixed remuneration | 573,300 | 573,300 | 623,300 | 623,300
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 326,700 | 326,700 | 376,700 | 406,700
Variable remuneration in cash | 200,000 | 259,211 | 259,211 | —
Variable remuneration in shares 4 | 200,000 | 259,211 | 259,211 | —
Deferred variable remuneration in cash 5 | 300,000 | 388,817 | 388,817 | —
Deferred remuneration in shares without performance conditions 6 | 300,000 | 388,817 | 388,817 | —
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | 14,638 | 15,238 | 15,574 | 15,863
Total | 1,914,638 | 2,211,294 | 2,311,630 | 1,045,863

1 Deputy Chief Executive Officer since 1 March 2015 and Chief Executive Officer from 15 July 2021.
2 Fixed Pay Allowance awarded to certain ‘Material Risk Takers’.
3 Fixed Pay Allowance awarded in form of cash on a monthly basis.
4 Shares that vest immediately and are subject to a 12 months‘ retention period.
5 Variable remuneration in cash deferred over five years (20 per cent per year will vest from year n+1).
6 Variable remuneration in shares without performance conditions deferred over five years (20 per cent per year from year n+1) and subject to a 12 months‘
retention period.
7 Renounced the payment of his Directors' fees by HSBC Continental Europe (see page 24).
8 Company car and accommodation allowance. As Chief Executive Officer, he is also entitled to a medical cover and tax assistance.

Deputy Chief Executive Officer 1
| 2022 | 2023 | 2024 | 2025
| Compensation awarded in 2022 | Compensation awarded in 2023 | Compensation awarded in 2024 | Compensation awarded in 2025
| € | € | € | €
Christopher Davies |  |  |  |
Fixed remuneration | 541,481 | 528,674 | 541,642 | 541,642
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 91,539 | 89,412 | 91,606 | 89,532
Variable remuneration in cash | 155,957 | 153,000 | 165,000 | 153,000
Variable remuneration in shares 4 | 155,957 | 153,000 | 165,000 | 153,000
Deferred variable remuneration in cash 5 | 103,971 | 102,000 | 110,000 | 101,666
Deferred remuneration in shares without performance conditions 6 | 103,971 | 102,000 | 110,000 | 101,666
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | — | —
Total | 1,152,876 | 1,128,086 | 1,183,248 | 1,140,506

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Deputy Chief Executive Officer 1
| 2022 | 2023 | 2024 | 2025
| Compensation for 2022 | Compensation for 2023 | Compensation for 2024 | Compensation for 2025
| € | € | € | €
Christopher Davies |  |  |  |
Fixed remuneration | 541,481 | 528,674 | 541,642 | 541,642
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 91,539 | 89,412 | 91,606 | 89,532
Variable remuneration in cash | 153,000 | 165,000 | 153,000 | 161,100
Variable remuneration in shares 4 | 153,000 | 165,000 | 153,000 | 161,100
Deferred variable remuneration in cash 5 | 102,000 | 110,000 | 101,666 | 107,400
Deferred remuneration in shares without performance conditions 6 | 102,000 | 110,000 | 101,666 | 107,400
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | — | —
Total | 1,143,020 | 1,168,086 | 1,142,580 | 1,168,174

1 Deputy Chief Executive Officer since 8 February 2019.
2 Fixed Pay Allowance awarded to certain ‘Material Risk Takers’.
3 Fixed Pay Allowance awarded in form of cash on a monthly basis.
4 Shares that vest immediately and are subject to a 12 months‘ retention period.
5 Variable remuneration in cash deferred over four years (25 per cent per year will vest from year n+1).
6 Variable remuneration in shares without performance conditions deferred over four years (25 per cent per year from year n+1) and subject to a 12 months‘
retention period.
7 As non Director he is not entitled to Directors' fees (see page 24).
8 Is entitled to an annual cost of living allowance, an accommodation allowance, a travel allowance, a medical cover and tax assistance.

Deputy Chief Executive Officer 1
| 2022 | 2023 | 2024 | 2025
| Compensation awarded in 2022 | Compensation awarded in 2023 | Compensation awarded in 2024 | Compensation awarded in 2025
| € | € | € | €
Joseph Swithenbank |  |  |  |
Fixed remuneration | — | — | 250,000 | 322,500
Fixed Pay Allowance ‘Material Risk Taker’2,3 | — | — | — | —
Variable remuneration in cash | — | — | — | 97,950
Variable remuneration in shares 4 | — | — | — | 97,950
Deferred variable remuneration in cash 5 | — | — | — | 65,300
Deferred remuneration in shares without performance conditions 6 | — | — | — | 65,300
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | 2,956 | 2,430
Total | — | — | 252,956 | 651,430

Deputy Chief Executive Officer 1
| 2022 | 2023 | 2024 | 2025
| Compensation for 2022 | Compensation for 2023 | Compensation for 2024 | Compensation for 2025
| € | € | € | €
Joseph Swithenbank |  |  |  |
Fixed remuneration | — | — | 250,000 | 322,500
Fixed Pay Allowance ‘Material Risk Taker’2,3 | — | — | — | —
Variable remuneration in cash | — | — | 97,950 | 114,000
Variable remuneration in shares 4 | — | — | 97,950 | 114,000
Deferred variable remuneration in cash 5 | — | — | 65,300 | 76,000
Deferred remuneration in shares without performance conditions 6 | — | — | 65,300 | 76,000
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | 2,956 | 2,430
Total | — | — | 579,456 | 704,930

1 Deputy Chief Executive Officer since 1st March 2024. Fixed remuneration and benefits in kind are taken into account for 10 months in 2024. Variable
remuneration is taken into account in full from performance year 2024.
2 Fixed Pay Allowance awarded to certain ‘Material Risk Takers’.
3 Fixed Pay Allowance awarded in form of cash on a monthly basis.
4 Shares that vest immediately and are subject to a 12 months‘ retention period.
5 Variable remuneration in cash deferred over five years (20 per cent per year will vest from year n+1).
6 Variable remuneration in shares without performance conditions deferred over five years (20 per cent per year from year n+1) and subject to a 12 months‘
retention period.
7 As non Director he is not entitled to Directors' fees (see page 24).
8 Company car.

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Shares awarded to each member of the management body in 2026 in respect of 2025 (Table
6)

HSBC Holdings plc shares without performance conditions (Table 6)
| Date of award | Number of shares awarded | Value of the shares at grant | Vesting date | Date of availability
Andrew Wild | 9 March 2026 | ND | — | — | —
Christopher Davies | 9 March 2026 | ND | EUR 107,400 | 25% on each following dates: | 25% on each following dates:
|  |  |  | March 2027 | March 2028
|  |  |  | March 2028 | March 2029
|  |  |  | March 2029 | March 2030
|  |  |  | March 2030 | March 2031
Christopher Davies | 9 March 2026 | ND | EUR 161,100 | March 2026 | March 2027
Joseph Swithenbank | 9 March 2026 | ND | EUR 76,000 | 40% in 2028 and 20% on each following dates: | '40% in 2029 and 20% on each following dates:
|  |  |  | March 2029 | March 2030
|  |  |  | March 2030 | March 2031
|  |  |  | March 2031 | March 2032
Joseph Swithenbank | 9 March 2026 | ND | EUR 114,000 | March 2026 | March 2027

Performance shares which became available for each member of the management body in 2025 (Table 7)
| Date of award | Number of shares which became available during the year | Vesting conditions
None |  |  |

HSBC Holdings plc shares vested for each member of the management body in 2025 (Table 8)
| Date of award | Number of shares vested 1 | Vesting conditions (in case of special conditions)
Andrew Wild | 24/2/2020 | 3,238 | —
Andrew Wild | 1/3/2021 | 3,448 | —
Andrew Wild | 28/2/2022 | 6,826 | —
Andrew Wild | 27/2/2023 | 9,631 | —
Andrew Wild | 26/2/2024 | 13,361 | —
Andrew Wild | 4/3/2025 | 23,659 | —
Christopher Davies | 24/2/2020 | 3,977 | —
Christopher Davies | 1/3/2021 | 4,202 | —
Christopher Davies | 28/2/2022 | 4,710 | —
Christopher Davies | 27/2/2023 | 3,857 | —
Christopher Davies | 26/2/2024 | 4,675 | —
Christopher Davies | 4/3/2025 | 14,331 | —
Joseph Swithenbank | 28/2/2022 | 1,437 | —
Joseph Swithenbank | 27/2/2023 | 3,945 | —
Joseph Swithenbank | 4/3/2025 | 8,940 | —

1 Part of the deferred shares awarded under the UK plan in 2020, 2021, 2022, 2023 and 2024 were vested in 2025. The immediate shares awarded in 2025 were
vested for 100 per cent in 2025. All these shares, immediate or deferred, are subject to a 12 months retention period after vesting.

HSBC Holdings plc shares, without performance conditions, awarded in 2025 in respect of 2024, to the 10 employees (excluding members of the management body) whose number of awarded shares is the highest (Table 10)
| Date of award | Number of shares awarded | Value of the shares at grant | Vesting date 1 | Date of availability 1
Total value of the 10 highest awards of shares (employees or former employees) | 4/3/2025 | 386,923 | EUR 4,239,345 | March 2025 for 100% or March 2027 for 66% and March 2028 for 34% or March 2026 to 2029 for 25% per year or March 2026 to 2030 for 20% per year | 12 months after the award

1 Part of the shares awarded to employees considered as Material Risk Takers (see page 40) vests immediately and is available for sale twelve months after
vesting.

HSBC Holdings plc shares, without performance conditions, awarded in 2026 in respect of 2025, to the 10 employees (excluding members of the management body) whose number of awarded shares is the highest
| Date of award | Number of shares awarded | Value of the shares at grant | Vesting date 1 | Date of availability 1
Total value of the 10 highest awards of shares (employees or former employees) | 9/3/2026 | ND | EUR 4,390,698 | March 2026 for 100% or March 2028 for 66% and March 2029 for 34% or March 2027 to 2030 for 25% per year or March 2027, to March 2031 for 20% per year | 12 months after the award

1 Part of the shares awarded to employees considered as Material Risk Takers (see page 40) vests immediately and is available for sale twelve months after
vesting.

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HSBC Holdings plc shares, without performance conditions, vested in 2025, for the 10 highest employees (excluding members of the management body) split per year of award
| Number of shares vested 1 | Vesting dates
Total number of the 10 highest shares that vested in 2025 | 437,838 |
– of which award 2020 | 36,511 | 10.03.2025
award 2021 | 43,636 | 10.03.2025
award 2022 | 79,370 | 11.03.2025
award 2023 | 65,428 | 10.03.2025
award 2024 | 67,848 | 12.03.2025
award 2025 | 145,045 | 04.03.2025

1 The shares awarded are available,for sale twelve months after vesting.

Other information required by the Corporate Governance Code (Table 2) |
Members of the management body | Employment contract | HSBC Continental Europe supplementary pension scheme 1 | Compensation or benefits due or that may be due upon termination or change in duties | Compensation due under terms of non- compete agreement | Participation in the share capital of the company and quantity of shares held
Function
First appointed
Term ends
Andrew Wild |  |  |  |  |
Chief Executive Officer |  |  |  |  |
15 July 2021 | Suspended | Yes | No | No | No
Christopher Davies |  |  |  |  |
Deputy Chief Executive Officer |  |  |  |  |
8 February 2019 | Not applicable | No | No | No | No
Joseph Swithenbank |  |  |  |  |
Deputy Chief Executive Officer |  |  |  |  |
1st March 2024 | Suspended | Yes | No | No | No

1 See page 34.
Company remuneration policy
As HSBC Continental Europe is part of an international banking group,
its remuneration policy is defined at the level of the parent company.
As part of a delegation by the HSBC Group’s Board of Directors, the
HSBC Group’s Remuneration Committee is responsible for approving
the remuneration policy for the HSBC Group as a whole.
The remuneration policy in place in HSBC Continental Europe falls
within the framework of this global policy, while also ensuring that it
complies with local regulations, in particular Capital Requirement
Directive V ('CRDV') for the bank, Alternative Investment Fund
Management ('AIFM'), and Undertakings for Collective Investments in
Transferable Securities ('UCITS') for our Asset Management
companies, Investment Firm Directive ('IFD') and Investment Firm
Regulation (IFR) for our Investment companies and Solvency II for our
Insurance companies. In accordance with the article L 511-74 of the
Code Monétaire et Financier, the remuneration policy is submitted to
an independent audit, once a year, performed by the Internal Audit
department or risk permanent control team. The remuneration policy
is also approved by the local Risk and Regulatory Compliance
departments.
Governance
In accordance with local regulation, HSBC Continental Europe has set
up a dedicated governance structure which on several bodies.The
Board of Directors of HSBC Continental Europe, in its supervisory
function, approves, adopts and reviews at least once a year the
general principles of the remuneration policy and controls its
implementation and approves the remuneration of the members of
the management body in its management function.
The Remuneration Committee, composed of two independent non-
executive Directors and a staff representative, prepares the decisions
concerning the remuneration and remuneration principles to be
adopted by the Board of Directors, gives his view on the bank’s
policies and practices concerning compensation, ensuring that risk
and compliance dimensions are dully considered. Its scope of review
covers all aspects of remuneration policies and practices in place
within the company, although with a more in-depth review concerning
professionals whose activities have a significant impact on the risk
profile of the business, heads of internal control function and
members of the management body in its management function.
In this context, it reviews the remuneration policy by ensuring its
consistency with general principles of the HSBC Group's
remuneration policy, with the specific directives set by the global
business lines, its compliance with local standards in force and with
recommendations of banking supervisory bodies in France such as
the Autorité de Contrôle Prudentiel et de Résolution, the European
Central Bank, the Autorité des Marchés Financiers and the Fédération
Bancaire Française.
It evaluates the mechanisms and systems adopted to ensure that the
remuneration system takes due account of all types of risk and
liquidity and equity levels and that the overall remuneration policy is
consistent and promotes sound and effective risk management and is
consistent with HSBC Continental Europe's economic strategy,
objectives, culture and values, risk culture and long-term interests.
It reviews variable pay pools allocated by the global business lines to
local teams with regards to global performance of the business lines
and relative performance of local teams.
It reviews the identification process of identified staff and approves
the corresponding list.
It reviews the 20 highest compensation package in collaboration with
the HSBC Group's decision-making bodies and global business lines.
It reviews the synthesis of individual transgressions covering people
risk, regulatory compliance risk, and financial crime.
Finally it reviews the remuneration of any members of the
management body in its management function, of the Chief Risk
Officer of the Chief Compliance Officer and submits its
recommendations to the Board.

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Main characteristics of the remuneration
policy
This remuneration policy strives to achieve the following strategic
goals:
– To comply with the company's strategy and objectives, the long-
term sustainable interests and results of the company as a whole,
and its risk profile. This approach aims not to encourage risk-taking
that is not aligned with the risk acceptance level approved by the
HSBC Group or that could negatively impact the company or the
HSBC Group's capital;
– To implement a remuneration policy that takes into account
sustainability risks, particularly in the environmental field, in terms of
governance and diversity and inclusion;
– To ensure that there are no conflicts of interest when implementing
and executing the variable pay policy;
– To establish remuneration budgets (for fixed and variable pay) that
ensure a prudent balance between sound and effective
management of financial results and risks and an appropriate level of
capital;
– To set bonus pools linked to the sustainable financial performance
of the HSBC Group and each of the business lines/infrastructure
areas at global, regional and local level, business competitiveness
and the prudent management of risks for the HSBC Group and its
various business lines;
– To offer competitive remuneration packages and neutral from a
gender perspective;
– To ensure that the remuneration policy is based on the principle of
equal pay for men and women for the same work or work of equal
value;
– To adopt a total remuneration approach by clearly distinguishing
between the fixed remuneration elements (basic salary, fixed
allowances, etc.), the variable remuneration elements (discretionary
and/or collective variable remuneration) and any allowances paid in
the event of departure from the company which must correspond to
actual performance assessed over time and must not under any
circumstances reward the failure;
– To establish a balanced and sufficient level of fixed remuneration
that does not cause employees to be abnormally dependent on their
variable pay;
– To apply a discretionary approach that allows for judgement in
assessing individual performance and setting the level of variable
pay individually with regard to the performance rating, rather than an
automatic approach based on formulae that could encourage
inappropriate behaviour in terms of risk-taking and/or unsuitable
sales to our clients;
– To defer a significant portion of variable pay in the form of financial
instruments (HSBC Holdings Shares) in order to better align variable
pay with the HSBC Group's performance, help retain our employees
and meet our regulatory obligations; and
– Not to implement methods or instruments to circumvent regulatory
principles in terms of variable pay.
Principles applicable to fixed pay
The base salary mainly rewards skills, expertise, technical know-how,
the level of responsibility and seniority in the position. In this context,
any potential increase may be justified by increased skills, expertise,
by an internal promotion with new scope of responsibilities, by a
growth in the size of the managed teams, by an increased influence
on the organisation, by a lack of internal o external competitiveness.
These increases, either selective or collective, have to comply with
the annual fixed pay budget, with any guidelines on a maximum level
and must not be promised by anticipation.
Principles applicable to variable pay
The first step is to set the variable pay pool that will be allocated to
the different business lines and infrastructure areas with regards to
their performance and their contribution to the HSBC Group and
business lines' global performance.
The variable pay pool is set primarily at HSBC Group level, taking into
account its sustainable financial performance and commercial
competitiveness overall and in each of its business lines, its global
performance in terms of risk management, its affordability to fund this
pool with its own results and its market position.
The HSBC Group variable pay pool is expected to reflect Group
performance, based on a range of financial, non-financial and
contextual factors. The HSBC Group uses a countercyclical funding
methodology, with both a floor and a ceiling, with the payout ratio
generally reducing as performance increases to avoid pro-cyclicality.
The floor recognises that even in challenging times, remaining
competitive is important. The ceiling recognises that at higher levels
of performance it is not always necessary to continue to increase the
variable pay pool, thereby limiting the risk of inappropriate behaviour
to drive financial performance.
The main quantitative and qualitative performance and risk metrics
used for assessment of performance include:
– HSBC Group and business unit financial performance, taking into
account contextual factors driving performance, and capital
requirements;
– current and future risks, taking into consideration performance
against the risk appetite, financial and resourcing plan and global
conduct outcomes; and
– fines, penalties and provisions for customer redress, which are
automatically included in the Committee’s definition of profit for
determining the pool.
Variable pay pools on a global basis and by business lines are
reviewed and approved by the Group Chief Risk Officer, the Group
Chief Executive Officer, the Group Chief Financial Officer, the Group
Chief Financial Officer and the Group Remuneration Committee.
nce approved, these variable pay pools are allocated, for each
business/segment/product/infrastructure areas by regions and
countries depending on their respective performance and
contribution. Local performances are measured through: i) financial
metrics such as profit before tax, trend in revenue, direct costs
control, profitability measured through return on tangible equity; ii)
non-financial metrics linked to sustainable risks such as reduction of
carbon path, development of sustainable finance and to healthy
particularly staff buy-in of the risk culture in financial crime, the control
of operational risks, the correct application of conduct principles with
a view to act in the best interests of clients, while respecting the
integrity of the financial markets and avoiding conflicts of interest. iii)
broader indicators such as increase in the client base, improvement of
the engagement index and inclusion index, stability of attrition rate for
high performers, successful implementation of transformation
projects, etc.
These indicators are included in performance scorecard and are
analysed by comparison with objectives set at the start of the year.

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With regards to individual allocation, from Performance Year 2024, a
new remuneration approach has been introduced in order to
determine individual variable pay for great part of the population.
Using internal and external data, a pay mix ratio (variable pay
compared to fixed pay) has been calculated for clusters of employees
with the same role in the same business/infrastructure, the same
grade and the same localisation. Based on this pay mix, a target
variable pay is communicated at the start of the year to employees. At
year end, this target variable pay is adjusted, up or down, taking into
consideration overall performance of the Group, performance of the
Business/Infrastructure' employee belongs to and finally individual
performance.
For Senior Executives and employees in front lines roles in CIB, Asset
Management and Private Bank, the variable pay remains fully
discretionary and linked to the individual performance.
This new approach applies to all HSBC Continental Europe countries
from Performance Year 2024 except for France, Malta and Spain
where it has been introduced in Performance Year 2025 and e xcept
for Germany and Malta wi th no implementation date defined yet.
Regarding individual performance of each employee, it is assessed
throughout the year through routine discussions and feedback, and,
more formally, at the end of the year during the annual performance
assessment. The employee's individual performance is assessed by
the manager using the following three ratings scale:
– "Outstanding"
– "Performing"
– "Off track”
Subject to local regulations, from 2024 onwards, employees must
comply with a minimum standard on behaviour/conduct against HSBC
values (Gateway approach). If they do not comply, their performance
is considered as off track and they are not eligible to receive any
variable pay.
The individual performance assessment is based on the achievement
of objectives set by the manager at the beginning of the year. These
objectives can include, according to the role and the position in the
organisation:
– financial indicators (revenue growth, cost control, increase in profit
before tax, etc.);
– indicators related to sustainability risks (carbon footprint reduction,
development of sustainable finance, facilitated financing to help
clients transition to carbon neutral, upskilling on environmental
issues, etc.); and
– indicators related to healthy risk management (respect of
compliance and internal control rules, quality of sales or service,
control of operational risks, monitoring of audit issues, etc.).
The indicators underpinning these objectives depend on the position
held and the level of responsibility and are reviewed in comparison
with the objectives for the year which are formalised, at the start of
each year, in the employees' annual performance scorecards. The aim
of the three-level performance measurement scale is to facilitate
differentiation on variable pay, based on the performance score and
efforts in relation to the targets set at the beginning of the year.
In addition the Control Functions contribute to the final calculation of
variable pay under the Incentivising Compliance process, in the event
of non-compliance with internal rules or exceptional actions/
achievements, In such situations, variable pay may be reduced,
capped or increased.
Lastly, a ‘malus’ policy applies to all employees receiving deferred
variable pay. This allows the HSBC Group’s Remuneration Committee
to cancel, reduce or amend all or part of variable pay awarded on the
basis of the employee’s behaviour or factors justifying such action.
To be also noted that all vested awards are subject to the HSBC
Group ‘Clawback’ policy. This allows, in case of breaches, to recover
full or partial part of vested cash or shares.
Regarding guaranteed bonuses they are no more awarded since
2020. They have been replaced by New Hire Indicative Variable Pay
still highly exceptional, limited to one year and only in a high profile
hiring context.
Finally, r egarding severance payments, they follow local legal or
collective bargaining agreements' rules.
It should be noted that beyond the Material Risk Takers population
(see below), a significant proportion of the company’s senior
managers are affected by the minimum deferral compensation rules s
defined by the HSBC Group which provide for deferred compensation
in the form of shares of between 10 per cent and 30 per cent of
variable compensation, with three years vesting rules and no
retention period.
Remuneration policy applicable to Risk takers
CRD V
The following information is published in accordance with article 266
of the order of 3 November 2014 on internal control of banking sector
companies, based on articles L. 511-64, L. 511-71 and L. 511-72 of
the French Monetary and Financial Code and article 450 of (‘UE’)
regulation 575/2013.
In compliance with the rules under CRD V directive, some employee
categories ('Identified Staff') are subject to specific rules regarding
structure and award of variable pay. These employees, considered to
have an impact on the entity’s risk profile (‘Material Risk Takers’), are
identified on the basis of qualitative and quantitative criteria defined
by the European Banking Authority. Pursuant to these criteria, 330
employees have been identified at Group and local level in 2025
For this population, variable remuneration is limited to twice the fixed
remuneration (ratio at 100% for Malta Material Risk Takers), ,
according to the decision made by HSBC Continental Europe
shareholders’ Annual General Meeting held on 23 May 2014. In order
to maintain the competitiveness of Material Risk Takers
remuneration, Group has modified the remuneration of several of
them by allocating a monthly fixed pay allowance linked to their
function. In addition their variable remuneration is deferred by 40 per
cent and even by 60 per cent for the highest variable. Finally, variable
remuneration granted in the form of shares accounts for 50 per cent
of variable remuneration granted; this 50 per cent applies to both the
deferred component and to its immediately paid fraction.
It should be noted that if the variable remuneration amount is equal or
lower than 1/3 of total remuneration and equal and lower than EUR
50,000, the variable remuneration is granted in cash immediately paid.
For French employees, the deferred share-based portion is not vested
by the employee until after either a period of two years for 50 per
cent, three years for 25 per cent and after four years for the remaining
25 per cent or a period of two years for 40 per cent, three years for 20
per cent, four years for 20 per cent and five years for the remaining
20 per cent. This is furthermore subject to a one-year retention period
(starting from vesting. In addition there is a prohibition on hedging it.
For our employees working in our European branches or subsidiaries,
deferred shares vest either over four years of 25 per cent each or
over five years of 20 per cent each.
AIFM/UCITS
With effect from 1 January 2017, management companies under
certain conditions are governed by the UCITS Directive in addition to

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the Alternative Investment Funds Management (‘AIFM’) Directive
already in place since 1 January 2015.
In accordance with these Directives, categories of employees of
HSBC Global Asset Management (France), HSBC REIM (France),
HSBC Private Bank Luxembourg and INKA Internationale
Kapitalanlagegesellschaft mbH (Germany) are subject to specific rules
in term of variable remuneration. The employees concerned, are
those whose professional activity has a significant impact on the risk
profile of the management company or its alternative investment
funds.
In 2025, a total of 74 risk takers have been identified risk takers
through AIFM/UCITS regulation.
For this population, variable remuneration is 40 per cent deferred if it
is lower than GBP 500,000 and 60 per cent deferred for variable
remuneration of more or equal to GBP 500,000.
Subject to local regulations, part of the non-deferred and deferred part
of the variable pay is paid either in cash indexed on funds
performance (France, Luxembourg) or in HSBC Shares (Germany).
and subject to a 12 months retention period after vesting.
Solvency II
In accordance with this Solvency II Directive, categories of employees
of HSBC Life Insurance Malta identified as risk takers are subject to
specific rules in term of variable remuneration. In 2025, 18 employees
have been identified as risk takers under Solvency II.
For this population, a part of their variable remuneration is deferred.
This deferred part comprises shares that totally vest after a three
years vesting period and that is applied under specific conditions
described below:
– 60 per cent of the variable remuneration is deferred when its total
amount is equal or above GBP 500,000; and
– 40 per cent of the variable remuneration is deferred when its total
amount is under GBP 500,000.
However, risk takers whose variable remuneration is lower than GBP
500,000 (or an equivalent amount in local currency) and whose
variable pay is under 1/3 of their total compensation and under EUR
50,000 are considered as ‘de minimis’. On this basis, they are subject
to HSBC Group deferral standard rules, which means a deferral
between 10 per cent to 30 per cent according to the level of their
variable.
IFD/IFR
Investment companies are subject to UE 2019 / 2023 Investment
Firm Regulation ('IFD') and UE 2019 / 2034 Investment Firm Directive
('IFR') Directives.
Pursuant to these directives, categories of employees ('Identified
Staff') from HSBC Global Asset Management Germany are subject to
specific rules in terms of variable remuneration. The employees
concerned are those whose professional activity has a significant
impact on the risk profile of the company.
In 2025, 12 employees have been identified under IFD/IFR directives
in HSBC Global Asset Management Germany.
For this population, subject to having a variable pay above EUR 50,000
and representing more than 1/3 of the total remuneration, the variable
pay is 40 per cent deferred if it is lower than GBP 500,000 and 60 per
cent deferred if it is higher than GBP 500,000. The deferred par of the
variable pay is awarded in the form of shares, has a 4 years vesting
period and is subject to a 12 months retention period.

In accordance with CRD V Directive
Consolidated quantitative information about compensation paid to
executive members and financial market professionals, whose
activities have a material impact on the company’s risk exposure.
Amounts are expressed in EUR and correspond to gross salary
(excluding employer social security contributions and before
deduction of payroll costs).
Remunerations awarded to overall staff

| Full time Equivalent 2025 1 | Total remuneration 2025
€
Members of the management body (in its management function) | 3 | 2,900,669
Corporate and Institutional Banking | 2,809 | 360,030,172
International Wealth and Premier Banking | 1,084 | 96,373,287
Corporate Centre | 2,205 | 211,685,636
Total | 6,101 | 670,989,764

1 Staff as of 31 December 2025 excluding trainees and pre-retirements (CFCS).
Remuneration awarded to members of the management body and
professionals whose roles have a significant impact on risk profile of the
company

Total remuneration: distribution between fixed pay and variable pay
| Number of people concerned | Total remuneration 2025 | Total fixed pay | Total variable pay
| € | € | €
Members of the management body (in its management function) | 3 | 2,900,669 | 1,983,674 | 916,995
Corporate and Institutional Banking | 102 | 53,051,140 | 26,598,182 | 26,452,957
International Wealth and Premier Banking | 35 | 12,672,926 | 7,345,710 | 5,327,216
Corporate Centre | 153 | 29,652,652 | 21,891,203 | 7,761,449
Total | 293 | 98,277,386 | 57,818,769 | 40,458,617

Note: Table excludes 22 Non Executive Directors with no remuneration.

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Total variable pay: distribution between payments in cash and payments in shares
| Payments in cash | Payments in shares | Total variable pay
| € | € | €
Members of the management body (in its management function) | 458,497 | 458,497 | 916,995
Corporate and Institutional Banking | 13,429,287 | 13,013,670 | 26,452,957
International Wealth and Premier Banking | 2,726,479 | 2,600,739 | 5,327,216
Corporate Centre | 4,736,309 | 3,025,140 | 7,761,449
Total | 21,360,572 | 19,098,046 | 40,458,617

Note: Table excludes 22 Non Executive Directors with no remuneration.

Total variable pay: distribution between non deferred and deferred amount
| Non-deferred amount | Deferred amount | Total variable pay
| € | € | €
Members of the management body (in its management function) | 550,197 | 366,798 | 916,995
Corporate and Institutional Banking | 14,039,583 | 12,413,374 | 26,452,957
International Wealth and Premier Banking | 2,790,057 | 2,537,160 | 5,327,216
Corporate Centre | 5,213,166 | 2,548,283 | 7,761,449
Total | 22,593,003 | 17,865,615 | 40,458,617

Note: Table excludes 22 Non Executive Directors with no remuneration.

Total deferred variable pay: distribution between payments in cash and payments in shares
| Payments in cash | Payments in shares | Total deferred variable pay
| € | € | €
Members of the management body (in its management function) | 183,399 | 183,399 | 366,798
Corporate and Institutional Banking | 6,206,687 | 6,206,687 | 12,413,374
International Wealth and Premier Banking | 878,112 | 1,659,048 | 2,537,160
Corporate Centre | 1,259,141 | 1,289,141 | 2,548,283
Total | 8,577,339 | 9,338,276 | 17,865,615

Note: Table excludes 22 Non Executive Directors with no remuneration.

Amount of unvested deferred variable pay in respect of previous financial years
| Amount of unvested deferred variable pay in respect of previous financial years
| €
Members of the management body (in its management function) | 4,149,720
Corporate and Institutional Banking | 37,258,201
International Wealth and Premier Banking | 7,098,084
Corporate Centre | 10,106,081
Total | 58,612,086

This table shows outstanding deferred variable pay corresponding to
total unvested deferred remuneration before 31 December 2025, i.e.
variable pay that has been awarded but not yet paid (cash) or
delivered (shares) and which is still subject to a future ‘malus’
mechanism or early departure.
Shares and equivalent instruments are valued on the share value as at
31 December 2025. Outstanding vested variable pay in respect of
prior year can be impacted by departures from the company.

Amounts paid in respect of hiring (guaranteed variable)1
| Number of people concerned | Amount paid in respect of hiring (guaranteed variable)
| €
Members of the management body (in its management function) | — | —
Corporate and Institutional Banking | — | —
International Wealth and Premier Banking | — | —
Corporate Centre | — | —
Total | — | —

1 No guaranteed variable paid in respect of hiring.

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43

Corporate Governance report

Amount of severance payments |  |
| Number of people concerned | Amount of severance decided and paid in year n
| €
Members of the management body (in its management function) |  |
Corporate and Institutional Banking | 1 | 200,000
International Wealth and Premier Banking |  |
Corporate Centre | 5 | 1,863,473
Total | 6 | 2,063,473

Contributions to defined benefit plan 1
| Number of people concerned | Contribution to defined benefit plan
| €
Members of the management body (in its management function) | — | —
Corporate and Institutional Banking | — | —
International Wealth and Premier Banking | — | —
Corporate Centre | — | —
Total | — | —

1 No contributions paid to defined benefit plan.
Information on highest remunerations

Total remuneration
| Number of Material Risk Takers
Between EUR 1 million and EUR 1.5 million excluded | 13
Between EUR 1.5 million and EUR 2 million excluded | 2
Between EUR 2 million and EUR 2.5 million excluded | 3
Total | 18

In accordance with AIFM/UCITS and IFD/IFR Directives
Consolidated quantitative information about compensation paid to
executive members and financial market professionals, whose
activities have a material impact on the company’s risk exposure in
the entities HSBC Global Asset Management (France),
HSBC REIM (France),INKA Internationale Kapitalanlagegesellschaft
mbH (Germany) and HSBC Global Asset Management (Germany).
Amounts are expressed in EUR and correspond to gross salary
(excluding employer social security contributions and before
deduction of payroll costs).

HSBC Global Asset Management (France), HSBC REIM (France) and INKA (Germany)
| Total fixed pay | Total variable pay | Total remuneration
| € | € | €
Total of Employees (number: 613) | 53,831,029 | 15,535,285 | 69,366,314
Including employees who have a significant impact on the risk profile AIFMD (number: 71)1 | 12,246,754 | 7,700,197 | 19,946,952
Including Senior Managers (number: 21) | 4,023,674 | 2,500,391 | 6,524,066

1 Including 4 employees who are already in the CRD V material risk takers. To be noted that 3 employees are identified under AIFMD and under UCITS as well.

HSBC Asset Management (Germany)
| Total fixed pay | Total variable pay | Total remuneration
| € | € | €
Total of Employees (number: 120) | 14,456,472 | 5,158,847 | 19,705,318
Including employees who have a significant impact on the risk profile IFD/IFR (number: 12)1 | 3,435,222 | 2,186,269 | 5,621,491
Including Senior Managers (number: 7) | 2,363,539 | 1,861,425 | 4,224,964

1 Including 1 employee who is already in the CRD V material risk takers.
In accordance with Solvency II Directive
Consolidated quantitative information about compensation paid to
employees identified as Solvency II staff in the entities HSBC Life
Insurance Malta.
Amounts are expressed in EUR and correspond to gross salary
(excluding employer social security contributions and before
deduction of payroll costs).

| Total fixed pay | Total variable pay | Total remuneration
| € | € | €
Employees identifies as Solvency II staff (number: 16)1 | 2,410,642 | 966,845 | 3,377,487

1 Excluding 2 Non Executive Director with no remuneration. and including 15 employees who are already in the CRD V material risk takers list.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
44

Statutory Auditors’ special report on related-party agreements

PricewaterhouseCoopers Audit | BDO Paris
63 rue de Villiers | 43-47 avenue de la Grande Armée
92208 Neuilly-sur-Seine Cedex, France | 75116 Paris, France

Statutory Auditors’ special report on
related-party agreements
(Annual General Meeting for the approval of the financial statements for the year ended 31 December 2025)
HSBC Continental Europe
38, avenue Kléber
75116 Paris
To the Shareholders,
In our capacity as Statutory Auditors of HSBC Continental Europe, we hereby report to you on related-party agreements.
It is our responsibility to report to shareholders, based on the information provided to us, on the main terms and conditions of the agreements
that have been disclosed to us or that we may have identified as part of our engagement, as well as the reasons given as to why they are
beneficial for the Company, without commenting on their relevance or substance or identifying any undisclosed agreements. Under the
provisions of article R.225-31 of the French Commercial Code (Code de commerce), it is the responsibility of the shareholders to determine
whether the agreements are appropriate and should be approved.
Where applicable, it is also our responsibility to provide shareholders with the information required by article R.225-31 of the French Commercial
Code in relation to the implementation during the year of agreements already approved by the Annual General Meeting.
We performed the procedures that we deemed necessary in accordance with professional standards applicable in France to such engagements.
These procedures consisted in verifying that the information provided to us is consistent with the underlying documents.

Agreements to be submitted for the approval of the Annual General Meeting
Agreements authorised and entered into during the year
In accordance with article L.225-38 of the French Commercial Code, we have been informed of a new related-party agreement authorized during
the financial year, which received the prior approval of your Board of Directors.
With HSBC Bank plc Paris Branch, HSBC Assurances Vie (France) and Mutuelle Assurance des Travailleurs Mutualistes (Matmut)
The tax consolidation exit agreement, entered into on 31 October 2025 between HSBC Assurances Vie (France) and HSBC Bank plc Paris
Branch in connection with the disposal of HSBC Assurances Vie (France) by HSBC Continental Europe to Matmut, in the presence of HSBC
Continental Europe and Matmut, also parties to the agreement (agreement approved by the Board at its meeting held on 28 March 2025).
This agreement had no accounting impact for the financial year 2025.
Agreements authorised and entered into since the year-end
We have not been informed of any authorised agreements on the exercise and concluded since the close of the last financial year, which have
been subject to the prior authorisation of your Board of Directors.

Agreements already approved by the Annual General Meeting
Agreements approved in prior years:
a)that were implemented during the year
In accordance with article R.225-30 of the French Commercial Code, we were informed of the following agreements, approved by the Annual
General Meeting in prior years, which were implemented during the year.
With HSBC Bank plc Paris Branch (a company controlling HSBC Continental Europe and owning more than 10 per cent of the voting
rights)
Two agreements concluded in 2001 between your company and HSBC Bank p.l.c. Paris Branch also continued their effects in 2025:
– A shared services agreement to provide its members, at cost, with various services related to the two companies’ business activities.
Under the terms of this agreement, the income recorded in 2025 amounted to EUR 0.7 million.
– A tax consolidation agreement between HSBC Bank plc Paris Branch and the Company.
Under the terms of this agreement, tax income of EUR 21.84 million was recorded in 2025.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
45

Statutory Auditors’ special report on related-party agreements

With HSBC Holdings plc, a company controlling a shareholder company of HSBC Continental Europe and owning more than 10 per
cent of the voting rights
The agreement renewed in 2015 provides for the free use of the HSBC brand by the Company and its subsidiaries. This agreement had no
impact on the 2025 financial statements.
With HSBC Global Services (Hong Kong) Limited, HSBC Global Services (UK) Limited, HSBC Group Management Services Limited,
HSBC Global Services Limited, and HSBC Service Delivery (Polska) sp. z o.o., (a company in which HSBC Holdings plc, the controlling
company of HSBC Bank plc, a shareholder company of HSBC Continental Europe and owning more than 10 per cent of the voting
rights, has an indirect interest).
The agreement (Side Letter) entered into on 29 September 2021 with HSBC Global Services (Hong Kong) Limited, HSBC Global Services (UK)
Limited, HSBC Group Management Services Limited, HSBC Global Services Limited, and HSBC Service Delivery (Polska) sp. z o.o. relates to the
prepayment by HSBC Continental Europe to five of the Group's Services Companies of four months’ charges for the services provided in order
to meet contingency funding requirements to ensure Operational Continuity in Resolution (OCiR). The purpose of the contingency fund is to
ensure the availability of sufficient financial resources in the Group's Services Companies (ServCos) to safeguard the provision of services that
the HSBC Group relies on throughout a stress or resolution event.
Under the terms of this agreement, the prepayments recorded on the Company's statement of financial position amounted to EUR 277 million
in 2025 financial statements.
With HSBC Trinkaus & Burkhardt GmbH, a company controlled by HSBC Bank plc, a shareholder company of HSBC Continental
Europe and owning more than 10 per cent of the voting rights
The Domination and Profit and Loss Agreement, entered into on January 4, 2023, with HSBC Trinkaus & Burkhardt GmbH, an entity under the
control of HSBC Bank plc, a significant shareholder of HSBC Continental Europe with over 10 per cent of the voting rights, was part of the
acquisition strategy to secure 100 per cent ownership of HSBC Trinkaus & Burkhardt GmbH by HSBC Continental Europe S.A., Germany (the
German branch of HSBC Continental Europe). This agreement received the Board's approval during its meeting on October 14, 2022.
In 2025, this agreement facilitated the transfer of an exceptional loss amounting to EUR 0.75 million, as recorded by HSBC Trinkaus & Burkhardt
GmbH, to HSBC Continental Europe S.A., Germany, your company's branch in Germany.
With HSBC Service Company Germany GmbH, which is indirectly controlled by HSBC Bank plc, a shareholder company of HSBC
Continental Europe and owning more than 10 per cent of the voting rights
The Domination and Profit and Loss Transfer Agreement, entered into on 4th January 2023 with HSBC Service Company Germany GmbH, a
company indirectly controlled by HSBC Bank plc, a significant shareholder of HSBC Continental Europe with over 10 per cent of the voting
rights, relates to the acquisition of the entirety of shares in HSBC Service Company Germany GmbH held by HSBC Trinkaus & Burkhardt
Gesellschaft für Bankbeteiligungen GmbH by HSBC Continental Europe S.A., Germany (the German branch of HSBC Continental Europe). This
agreement was approved by the Board in its meeting on 14th October 2022.
In 2025, the effect of this agreement was the transfer of a net profit of EUR 1.2 million recorded by HSBC Service Company Germany GmbH to
HSBC Continental Europe S.A., Germany, the German branch of your entity.
With Jean Beunardeau, Chairman of the Board of Directors
Reinstatement, as of 15 July 2021, of Jean Beunardeau's employment contract, which had been suspended since his appointment as Deputy
Managing Director on 1 February 2010. This agreement was authorised by the Board of Directors at its meeting on 9 June 2021 and was
entered into on 19 July 2021.
This agreement resulted in a payment of EUR 2,285,682 during 2025 financial year.
b)that were not implemented during the year
In addition, we were informed that the following agreement, approved by the Annual General Meeting in previous years, remained in force but
was not implemented during the year.
With HSBC Bank plc and HSBC UK Bank plc, (a company controlling HSBC Continental Europe and a shareholder company controlling
HSBC Continental Europe respectively, and owning more than 10 per cent of the voting rights)
The indemnity agreement entered into in 2019 between HSBC Continental Europe and HSBC Bank plc and HSBC UK Bank plc in order to
indemnify HSBC Bank plc and HSBC UK Bank for any costs that they may still be required to pay pursuant to their obligations to their
beneficiaries, who have become customers of HSBC Continental Europe, HSBC Bank plc and HSBC UK Bank plc whilst no longer having
authorisation to supply certain international commercial tools and services (“Trade”) to companies situated in the European Economic Area
(EEA) after the United Kingdom left the European Union.
Under the terms of this agreement, no income was recorded in 2025.

Executed in Neuilly-sur-Seine and Paris, on 25 February 2026
The Statutory Auditors
PricewaterhouseCoopers Audit | BDO Paris
Amel Hardy Ben Bdira | Vincent Génibrel

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46

Sustainability Statement

Sustainability Statement

Contents
46 | Sustainability Statement
66 | Environmental
66 | Climate change
74 | Nature
78 | EU Taxonomy economic performance indicators
83 | Social
93 | Governance
102 | Appendix

Background to the sustainability
statement
This sustainability statement has been prepared by HSBC Continental
Europe in accordance with Articles 19a and 29a of the Corporate
Sustainability Reporting Directive (EU) 2022/2464 (‘CSRD’) as
transposed into national law and the European Sustainability
Reporting Standards (‘ESRS’) as adopted by the European
Commission (‘EC’). While 2024 marked the first year of
implementation, 2025 continues to be subject to several limitations
and challenges, including uncertainties with the interpretation of the
new rules, the lack of sector-specific guidance and established best
practices, as well as limitations in the availability, consistency, and
quality of data.
Given this context, HSBC Continental Europe has focused on the
implementation of the mandatory requirements under the ESRS as
applicable.
– With respect to the double materiality assessment ('DMA') and
value chain, HSBC Continental Europe faced limitations in data
availability, consistency, and quality, as well as in the maturity of
valuation methodologies. The DMA involved judgements,
assumptions, and estimates, as detailed in the relevant sections of
this statement. Subject to any future regulatory changes or
expectations, the result of the DMA may be re-assessed to
consider the evolving data, methodologies, regulatory
requirements, and sector-specific guidance, where applicable.
– Methodologies, data, scenarios and industry standards that have
been used may evolve over time in line with market practice,
regulation and developments in science, where applicable. Any
such developments in methodologies and scenarios, and changes
in the availability, accuracy, and verifiability of data over time and our
ability to collect and process such data could result in revisions to
our internal measurement frameworks as well as reported data
going forward, i ncluding on financed emissions, meaning that such
data may not be reconcilable or comparable year-on-year.
– W ith respect to the EU Taxonomy, HSBC Continental Europe has
not disclosed certain information, where considered to be not
material or relevant. Please see section ‘EU Taxonomy economic
performance indicators’ on page 78 for further details.
This sustainability statement has been prepared at a consolidated
level (i.e. including its subsidiaries and branches), using the same
consolidation principles as those applied in its financial statements.
Accordingly, certain assets and businesses that were sold during
2025 have been excluded from the scope of the Bank’s DMA and this
statement. Refer to 'The double materiality assessment process' on
page 50 for specific details of assets and businesses excluded.
However, the Bank continued to include the assets classified as ‘held
for sale’ in its DMA. The Bank has conducted materiality assessment
for these entities and identified no changes to the DMA outcome. For
further details refer to ‘Note 2 Assets held for sale, liabilities of
disposals groups held for sale and discontinued operations’ on page
212.
HSBC Continental Europe as a first-year reporting entity (‘Wave 1’),
has applied the transitional relief measures and phase-in provisions
permitted under the ESRS including the EC targeted ‘quick-fix’
amendments, where applicable. Where transitional reliefs have been
applied, this has been disclosed in the relevant sections of this
sustainability statement. The comparative information has been
prepared in accordance with the transitional and phase-in provisions
applicable in the comparative reporting period.
In accordance with Article 8 of the EU Taxonomy Regulation
2020/852, the Bank has included EU Taxonomy disclosures as part of
the consolidated sustainability statement. Any difference in
consolidation between CSRD reporting and EU Taxonomy reporting
are explained in the relevant sections of this sustainability statement.
HSBC Continental Europe has relied on the exemption for
undertakings based in an EU member state to not disclose impending
developments or matters in the course of negotiation, under articles
19a(3) and 29a(3) of Directive 2013/34/EU (as transposed into French
law).
HSBC Continental Europe's approach to sustainability reporting will
continue to evolve to consider alignment with future regulatory
requirements, industry guidance, best practices, and
recommendations.
u For additional information regarding the 'estimates' and 'time horizon'
applied in the preparation of this statement, please refer to 'Additional
notes on the preparation of this statement - estimation and time horizon'
section on page 65.
Limited assurance is performed by PricewaterhouseCoopers Audit
(‘PwC’), who are one of the external auditors to HSBC Continental
Europe. Refer to the Independent Auditors’ Report on page 99.

Strategy, business model and value
creation
Strategy
The HSBC Group is one of the largest banking and financial services
organisations in the world. The HSBC Group helps meet its
customers' financial needs and supports them to achieve their goals
with its products and services, while navigating the complexities of
the global market through its deep international network, supported
with the stability and strength of its balance sheet.
HSBC Continental Europe is the HSBC Group's dedicated
Intermediate Parent Undertaking ('IPU') for European Union ('EU').
HSBC Continental Europe has been undertaking a transformation to
focus its resources on being the leading corporate and institutional
bank for international clients in Europe. This includes increasing
HSBC Continental Europe's leadership and market share in areas
where HSBC Continental Europe has a clear competitive advantage,
and the greatest opportunity to grow and support HSBC Continental
Europe's clients, in particular connecting European clients to
opportunities across HSBC’s international network and supporting the
European needs of HSBC’s global client

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
47

Sustainability Statement

base. HSBC Continental Europe's strategy is consistent with the
HSBC strategy and supports the Group's ambition to be the most
trusted bank globally, putting customers at the heart of everything it
does.
u For more information on the HSBC Group and its strategy implemented in
Continental Europe, refer to the ‘Presentation of Activities and Strategy’
section on page 4.
Incorporating sustainability into strategy
HSBC C ontinental Europe’s approach to sustainability is aligned with
that of the HSBC Group, focusing on creating long-term value for its
customer s and wider stakeholders. The HSBC Group focuses its
efforts on three areas: the transition to net zero, building inclusion
and resilience, and acting responsibly. This Sustainability Statement
and the respective Environment, Social and Governance sections
provide further information on how HSBC Continental Europe
contributes to the HSBC Group ESG strategy.
Transition to net zero
The HSBC Group ambition is to become a net zero bank by 2050.
Supporting HSBC customers is core to the strategy, with financing
their transition playing a key role in achieving the net zero objectives.
The HSBC Group believes delivering the transition will make the
global economy stronger and more resilient.
In its inaugural Net Zero Transition Plan in January 2024, the HSBC
Group recognised that its approach would need to evolve to keep
pace with a dynamic world. Since then, while the transition has
progressed, the global pace of change remains insufficient.
Customers of the bank are navigating a complex transition to net
zero, made even more challenging by significant shifts in the
macroeconomic and geopolitical landscape. At the same time, the
HSBC Group has also recently restructured its business to better
serve its customers. This has created new opportunities to leverage
what the HSBC Group has learned about HSBC customers' transition
needs, the drivers of the future growth and the role HSBC can plan
play as a financial institution.
The HSBC Group's updated Net Zero Transition Plan published in
November 2025, sets out a commercially grounded approach to help
customers succeed as the world moves towards a net zero economy.
Building on progress towards net zero ambition and targets, the
updated plan intensifies its efforts to be customer focused,
commercial and agile.
The HSBC Group has also refreshed its strategy to support the
transition of CIB customers. The HSBC Group is directing its
financing and capabilities towards the biggest areas of opportunity,
mobilising capital where customer demand and HSBC's real-economy
impact can be greatest.
The HSBC Group is taking steps to embed its approach to nature
alongside delivery of its net zero implementation plans and it
continues to test and scale approaches to financing and investing in
biodiversity and nature.
HSBC Continental Europe does not have an entity-level transition plan
under the relevant ESRS and continues to review its approach to
transition planning in line with regulatory requirements, available
guidance, and industry practice. As a material subsidiary of the HSBC
Group, HSBC Continental Europe actively contributes to the
achievement of the HSBC Group’s ambition.
Building inclusion and resilience
To help create long-term value for all stakeholders, the HSBC Group
focuses on fostering inclusion and help building resilience for its
colleagues, its customers and within broader society.
For employees, the HSBC Group focuses on creating an inclusive,
healthy environment and offers resources that support well-being.
The HSBC Group strives to provide an inclusive and accessible
banking experience for its customers. The HSBC Group does this by
providing resources that help manage customers’ finances, and
services that help customers protect what they value. HSBC
Continental Europe's philanthropy ambition is focused on supporting
local communities to help enable positive outcomes.
Acting responsibly
The conduct approach guides the HSBC Group to do the right thing
and focus on the impact it has on its customers and the financial
markets in which the HSBC Group operates. It complements the
HSBC Group purpose and values and, together with policies and
procedures, provides an enterprise-wide, outcome-focused
framework.
Business model
Aligned to the changes announced by the HSBC Group during 2025,
HSBC Continental Europe managed its products and services through
two global business lines:
– Corporate and Institutional Banking comprising client coverage and
network banking (Institutional clients, Global Corporates clients,
International Mid-Market clients, Innovation Banking clients),
Services and Transaction Banking (Deposits, Payments, Trade, FX/
Markets and Securities Services), Financing (Capital Markets and
Advisory, Infrastructure Finance and Sustainability Finance) and,
– International Wealth and Premier Banking (comprising Asset
Management and Private Banking, in addition to Insurance and
Retail Banking in Malta).
Corporate and Institutional Banking, International Wealth and Premier
Banking, as well as the Corporate Centre (comprising: certain legacy
assets and central stewardship costs) operating segment results are
presented on this basis in 'Income statement by global business
(continuing operations)'.
These global businesses are supported by the Chief Operating Officer
and global functions - including Risk, Finance, Compliance, Legal,
People and Internal Audit.
Products offered by HSBC Continental Europe include deposit
accounts, loans, payment solutions, trade finance, asset
management, insurance and other bespoke products tailored to
clients’ requirements. HSBC Continental Europe also offers
sustainability focused products such as green loans, social loans,
sustainability-linked loans, green, social and sustainability bonds
among others.
u For more information on the HSBC Continental Europe’s business model,
refer to the ‘Business segments’ section on page 5.
From a geographical perspective, HSBC Continental Europe
comprises mainly the Paris hub, its EU branches (Belgium, Czech
Republic, Germany, Ireland, Italy, Luxembourg, Netherlands, Poland,
Spain and Sweden) and its banking subsidiaries in Malta and
Luxembourg.
u For information on the headcount of HSBC Continental Europe employees
by geographical area, see ‘Characteristics of HSBC Continental Europe’s
workforce’ on page 84.

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48

Sustainability Statement

Value Creation
HSBC Continental Europe aims to create value for all stakeholders by
harnessing its resources to deliver responsible and innovative
financial solutions for its clients. The below tables outline the key
inputs, outputs and stakeholders in HSBC Continental Europe’s value
chain.

Inputs | Outputs
Financial – Funds to operate as a business and provide products and services to customers obtained through funding from shareholders and liquidity providers | – Financial stability and growth – Ability to invest in new projects and initiatives – Revenue generation and profitability
Intellectual – Intellectual property, brand and other specific knowledge that allows the Bank to operate competitively – Investment in innovation and product development | – Development of new products and services – Strengthened brand reputation and market presence – Competitive advantage through innovation
Human – Employees’ time, skills and expertise – Investment in workforce training and development | – Skilled and knowledgeable workforce – Improved employee performance and productivity – Higher employee satisfaction and retention
Social – Relationships with stakeholders that enhance the wellbeing of the wider society in which the Bank operates – Maintained through ongoing stakeholder engagement | – Stronger community ties and trust – Positive social impact and community initiatives – Improved stakeholder relationships and collaboration
Natural – Consumption of energy, water and other natural resources | – Efficient use of natural resources – Implementation of sustainable practices and technologies – Reduction in environmental footprint

Stakeholders in the value chain
HSBC Continental Europe recognises that its ability to succeed and
create long-term value is interconnected with the interests and views
of key stakeholder groups across all parts of its value chain. This
includes both direct business relationships and indirect interactions
through intermediaries and other stakeholders.

Upstream Value Chain
Stakeholder type | Description
Shareholders, such as: – Institutional investors – Retail investors | Provide capital to the Bank. As a 99.9 per cent owned subsidiary of the HSBC Group, HSBC Continental considers the HSBC Group’s institutional and retail investors within this stakeholder group.
Funding and liquidity providers, including: – Depositors – Small-Medium Enterprises – Corporate and institutional clients – Bondholders | Attract funding that enables the Bank to offer lending and other financial products and services.
Rating agencies, both: – Credit ratings agencies – ESG ratings agencies | Provide credit and ESG ratings to investors and to the Bank.
Financial industry association: – Industry bodies | Provide sector wide perspective on regulatory, market and sustainability matters.
Suppliers (including their workforce), comprising: – Technology providers – Card networks – Buildings service providers – Professional service s | Provide goods and services that are critical for the Bank's ongoing operations.
Government, Regulators and Tax Authorities including: – Banking regulators – Regulators with oversight of sustainability-related matters – Tax and local government authorities | Supervise the Bank to ensure its compliance with the relevant rules and standards.

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49

Sustainability Statement

Own Operations
Stakeholder type | Description
Workforce | Employees: individuals who are directly employed by the Bank on a full-time or part-time basis. Contractors: individuals who are engaged by HSBC Continental Europe on a temporary basis to deliver a specific service. Consultants: individuals contracted by HSBC Continental Europe from a consultancy company, professional services company or on a self-employed basis, to provide advice, guidance, or expertise. Internal Service Providers: individuals who are part of the HSBC Group but not directly employed by HSBC Continental Europe, such as employees of Global Technology Centres (‘GTC’) and Global Service Centres (‘GSC’). External Service Providers: individuals who are employed by a third-party company contracted by HSBC Continental Europe to provide a specific service e.g. payroll providers.
Social partners | Unions and works councils.
Board members | Governance body responsible for setting the strategy, overseeing and monitoring its implementation, including the risk strategy.

Downstream Value Chain
Stakeholder type | Description
Customers of the Bank, including Corporate, Institutional, Public Sector and Retail | Utilise the Bank’s products and services.
Distributors, including third-party payment processors and business partners | Distribute the Bank’s products and services to facilitate market penetration.
Intermediaries between the bank and buyers or sellers of products or services | Intermediaries between the Bank and buyers or sellers of products or services.
Local communities, including charities and non-profit organisations | Groups potentially affected by the Bank’s operations. This group includes customers of the Bank's clients and the wider community that could be potentially impacted, including trade unions and social partners, civil society and non-governmental organisations (‘NGOs’), analysts, academics and silent stakeholders such as ‘nature’.
Workers in the value chain, specifically employees of clients | The nature of the relationship can be either direct or indirect, depending on where in the value chain these workers and their employers are located. For the purposes of this report, this group includes workers of distributors and business partners, including corporate clients or workers in their value chains, which are or could be impacted through business relationships.

Engaging with stakeholders to inform our strategy
HSBC Continental Europe actively engages with its key stakeholders
through a variety of channels. The table below shows how HSBC
Continental Europe interacts regularly with its primary stakeholder
groups to gain insights of their views. While it is not an exhaustive
list, it represents the main focus areas for engagement and the main
outcomes.

Stakeholder Group | Key Areas of Interest | Engagement Approach | Purpose | Outcomes
Investors (existing and potential) | – Financial performance – Strategy execution – Progress against sustainability ambition | – AGMs – Virtual and in-person meetings – Conferences | – Understanding the needs of shareholders and investors on an ongoing basis | – HSBC Continental Europe’s strategic direction is in line with the expectations of those who provide capital and funding
Employees | – Remuneration and other benefits – Wellbeing – Corporate culture and job security – Training and skills development | – Annual Snapshot survey – Exchange meetings with senior management – Leadership summits – Townhalls – Speak-up channels, including global whistleblowing platform, HSBC Confidential | – Understanding the interests and views of employees on an ongoing basis – Understanding the factors that drive employee satisfaction and retention | – Enables HSBC Continental Europe to attract and retain talent to execute on its strategy
Suppliers | – Responsible supply chain management practices – Geopolitical impacts – Support in implementing sustainability requirements | – Virtual and in-person meetings – Supplier management platform – Third party onsite audits – Supplier day events | – To conduct supplier vetting, due diligence and monitor service delivery – To maintain relationships and provide capacity building – To set out the Bank’s ambitions and areas of focus on the environment, inclusion and human rights and outline the minimum standards expected of suppliers | – Continued service quality and customer service, as well as ensuring compliance with the HSBC’s Supplier Code of Conduct – Identify and mitigate the risk of human rights violations within the value chain – Supports HSBC Continental Europe on its path to net zero

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Sustainability Statement

Stakeholder Group | Key Areas of Interest | Engagement Approach | Purpose | Outcomes
Customers | – Access to products and services – Customer support – Availability of sustainable products and services – Pricing and value for money | – Customer meetings – Transition Engagement Questionnaires – Feedback through the Net Promoter Score (‘NPS’) – Complaints handling | – Understanding customer’s banking needs – For wholesale clients, understanding their net zero transition plans | – Customer satisfaction, ongoing product development and innovation, and delivery on the Bank’s strategy
Nature | – Mitigating adverse impacts arising from Nature related sustainability matters | – Indirectly through customers and NGOs – External scientific sources e.g. ENCORE and country geospatial data | – To understand the Bank’s impact on nature | – Enables the Bank to monitor nature related impacts and risks over time and adjust its strategy and business model as required
Communities and Non-Governmental Organisations (NGOs) | – Community outreach and support – Investing in the next generation, supporting vulnerable communities – Inclusion – Net zero transition | – Active engagement in philanthropy through the Corporate Sustainability team and volunteering employees – Reactive engagement where relevant for HSBC Continental Europe (e.g. in response to NGO publications or direct NGOs queries) – Targeted engagement with NGOs selected within the structuration of an ESG-linked loan, an ESG-related product or a client event | – To understand ways HSBC Continental Europe can support the communities in which it operates on an ongoing basis – To gain new perspective on trends that might affect the financial sector | – Positive outcomes on communities – Improved employee engagement – Insights on the communities in which the Bank operates
Regulators / Government | – Strategy execution – Compliance with regulations and guidance – Application of sustainability regulation, guidance and risk management | – Virtual and in-person meetings – Responding to consultations individually and jointly via industry bodies – On-site inspections | – Input into the policy landscape – Enabling their supervision of the Bank / financial sector | – Ensures HSBC Continental Europe’s regulatory compliance and financial stability
ESG rating agencies | – ESG disclosure and transparency – Climate strategy and governance – Risk management performance | – Respond to ESG surveys – Regular data updates and clarifications – Review and feedback on ratings | – Ensure accurate ESG representation – Strengthen transparency and credibility – Identify improvement areas | – Improved ESG scores and alignment – Increased investor confidence – Enhanced reporting quality
Financial industry associations | – Sustainable finance frameworks – ESG regulations and taxonomy – Industry collaboration | – Participate in forums and working groups – Contribute to papers and consultations – Share best practices | – Shape sustainable finance policies – Align with industry standards – Represent HSBC Continental Europe viewpoint | – Stronger industry partnerships – Improved regulatory alignment – Greater ESG leadership visibility

u For information on how the interests and views of stakeholders have been incorporated into the DMA, see ‘The double materiality assessment process’ section,
on page 50.
HSBC Continental Europe takes part in ongoing shareholder
engagement to understand and discuss the key topics from their
perspective. These conversations inform the approach to disclosures
and may result in the enhancement of the disclosures.
Both the Board of Directors and General Management as well as the
Operating Committee ('OpCo') members of HSBC Continental
Europe receive updates on sustainability-related topics from the
relevant business owners and functions formally during their regular
meetings. Where relevant, these updates include information about
the views and interests of affected stakeholders.
u For detailed information on the Bank's governance of sustainability matters,
refer to the following section 'Governance of sustainability matters'.

Material sustainability impacts, risks
and opportunities
The double materiality assessment
process
HSBC Continental Europe carried out its first double materiality
assessment in 2024 to identify and assess sustainability related
impacts, risks and opportunities ('IROs').
In 2025, the Bank reviewed its methodology, where relevant, and
material sustainability topics in response to relevant triggering events
or triggers. These include regulatory changes, shifts in stakeholder
expectations, emerging market or industry trends, internal strategic

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Sustainability Statement

developments, or other external circumstances that could influence
the relevance or significance of previously identified sustainability
topics.
The DMA is a multi-step process as defined below:
Step 1: Understanding the business context
The first step was an analysis of HSBC Continental Europe’s
operations and business relationships across its value chain, including
identification of the key stakeholders potentially impacted. This
assessment included reviewing the value chain maps from 2024 that
were developed by referencing to external sources such as Ecovadis
and Sustainalytics reports and mapping them to relevant stakeholder
groups. The process considered all geographies in which HSBC
Continental Europe operates, and all core products and services
offered by the Bank and its subsidiaries.
The value chain was updated to align with the organisational changes
that occurred in 2025.
Step 2: Identifying potentially material
sustainability matters
A review of the 2024 preliminary sustainability matters was
undertaken to assess relevance, continuation of applicability and any
potential new addition to the list. In addition to the suggested
sustainability matters included within the ESRS Application
Requirement 16 ('ESRS-1, AR 16'), other international standards and
frameworks, including the Sustainability Accounting Standards Board
(‘SASB’), Global Reporting Initiative (‘GRI’), Taskforce on Climate-
related Financial Disclosures ('TCFD'), Taskforce on Nature-related
Financial Disclosures ('TNFD') and United Nations Environment
Programme- Finance Initiative ('UNEP–FI') Impact Radar were
reviewed to identify any additional sector-specific topics that may be
relevant across HSBC Continental Europe’s value chain. This was
further supplemented with additional inputs gathered through
stakeholder engagement and Subject Matter Expert ('SME')'s
assessment. Finally, this preliminary list was benchmarked against
peers to finalise the topics and matters to be assessed for materiality.
Step 3: Updating impacts, risks and
opportunities
In 2025, HSBC Continental Europe reviewed and updated its
inventory of IROs. The 2024 list of IROs was used as a baseline and
reassessed to reflect changes in the Bank’s organisational structure,
portfolio composition, assets disposal and evolving regulatory
landscape. This review was informed by internal risk assessments
and relevant stakeholder inputs. New IROs were identified for the
additional sustainability matters identified in the previous step. The
resulting IRO list represents HSBC Continental Europe’s current view
of its actual and potential impacts as well as the risks and
opportunities across its own operations and value chain.
Step 4: Assessing the impact and financial
materiality of sustainability matters
The assessment of the impact and financial materiality of this revised
list of IROs and topics involved two independent processes: firstly
with internal SME at IRO level basis revised IRO list and finally with
the key stakeholder groups at topic level defined in the first step.
Subject matter expert consultation
SMEs and professionals from relevant functions of HSBC Continental
Europe were appointed to evaluate the IROs list. To aid their
assessment, they consulted internal data, as well as the existing
HSBC Group and Continental Europe reporting and risk assessments.
The Exploring Natural Capital Opportunities, Risks and Exposure
(‘ENCORE’ 2024 version) tool and the salient human rights
assessment were also key inputs that informed their assessment of
nature and social topics respectively.
The following criteria were used to guide the assessment and
prioritisation of the different IROs. Each parameter was assigned a
scoring scale which was then consolidated into a final materiality
score and finally a materiality threshold was applied.

Materiality assessment | Parameter | Definition
Impact | Scale | How grave the negative impact is or how beneficial the positive impact is for people or the environment
| Scope | How widespread an impact could be
| Irremediability (for negative impacts) | Whether and to what extent the negative impacts could be remediated
| Likelihood (for potential impacts) | Probability of occurrence
Financial | Magnitude | Potential size of a financial effect (risk or opportunity)
Likelihood | Probability of occurrence

As part of the assessment process, the interlinkage between impacts
and dependencies as drivers to risks and opportunities were taken
into account, by considering potential risks which could arise from
negative impacts and opportunities from positive impacts.
Impacts were assessed on a gross basis, meaning without
considering any mitigating actions. For potential impacts related to
social and business conduct, likelihood was assessed by taking into
consideration mitigating actions.
S takeholder engagement
I n 2025, HSBC Continental Europe considered two additional
stakeholder groups: Financial industry associations and ESG Rating
agencies.
The inclusion of additional stakeholder groups ensured the alignment
with industry standards and covered the perspective of all key
stakeholder groups.
For 2025 assessment, HSBC Continental Europe engaged with
internal SMEs as proxies for the stakeholder groups. These proxies
were selected based on their regular interactions with the
stakeholder groups and understanding of their expectations. The
above approach also ensured that it supplemented last year’s data
driven analysis based on desktop research and indirect engagement
with internal SMEs through questionnaires and interviews.

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Sustainability Statement

Stakeholder groups and method of engagement/proxy information
Stakeholder Group | Stakeholder Engagement (through interview) | Proxy Information (desktop research)
Wholesale customers | Indirect engagement through proxy interviews/questionnaire with relationship management teams of wholesale banking | ESG rating providers and customers’ and suppliers’ annual and sustainability reports
Suppliers | Indirect engagement through proxy interviews/questionnaire with procurement teams | Risk analytics provider, which grades ESG risks across the globe
Employees | Indirect engagement through proxy interviews/questionnaire with people team | HSBC workforce engagement papers and snapshot survey results
Nature,Communities and NGOs | Indirect engagement through proxy interviews/questionnaire with corporate sustainability team | HSBC NGO engagement reports and internal tools
Regulators, governments and investors | Indirect engagement through interviews with Compliance | Financial institutions peer review and HSBC reporting frameworks
Indirect engagement through interviews with Investor Relations
Financial industry association | Indirect engagement through proxy interviews/questionnaire with ESG Finance reporting team | Risk analytics provider, which grades nature related risks
ESG rating agencies | Indirect engagement through interviews/questionnaire with corporate sustainability team |

Due to data constraints, the assessment focused on direct
contractual relationships and did not include the value chain of HSBC
Continental Europe’s clients and suppliers. Indirect relationships were
considered only in relation to investments, as detailed in this report.
Aggregation and calibration of material sustainability matters
The outcomes of these two assessments were compared and
calibrated in order to determine any matters for which there was a
divergent view of materiality between SMEs and stakeholders. In
such cases, further detailed analysis was carried out with the
respective SMEs, and a final determination was made based on all
available inputs and documentation.
This consolidated list of material sustainability matters was then
benchmarked using inputs from internal review and challenge by
internal governance functions, including th e Op Co.
Step 5: Validation and sign-off
A series of workshops were conducted to facilitate the assessment
and review by relevant decision making authorities. In some
instances, materiality was re-assessed considering the inputs from
decision making authorities and subject to SME review and
challenge. The final list of material IROs was then presented to the
OpCo and Board of Directors for approval.
Notes on methodology and process
ESG risk management capabilities have been enhanced over the year
and progress continues to be made to embed sustainability into the
Bank's daily activities, strategy and risk management practices.
In 2025, the Bank enhanced its assessment methodology for the
Nature DMA by increasing the coverage of nature impacts by client's
value chain and refinement of ENCORE pressure and dependency
driver mapping to assess its negative impacts and risks.
u Refer to Nature section for more details on approach and methodology.
page 74.
This assessment was conducted based on the most up to date
understanding and data available at the time of the assessment. It is
important to recognise that the financial and sustainability landscape
is inherently dynamic and subject to change. As such, this is a point-
in-time view that is expected to evolve over time.
The identification of the most material risks related to ESG across
HSBC Continental Europe was performed in line with the HSBC
Group Risk Framework including the Risk Management Framework,
applicable to all risks across the organisation. The identification and
assessment of these risks also rely on risk management tools such
as appetite for risk, risk mapping, emerging risk, horizon scanning and
stress testing and scenario analysis.
Certain limitations were encountered while conducting the DMA
particularly around availability of data. This warranted the use of
assumptions and proxies where appropriate as covered in the
respective detailed sections of the disclosure.
In December 2024, HSBC Continental Europe signed a memorandum
of understanding for the potential sale of its French life insurance
business, HSBC Assurances Vie (France), to Matmut Société
d’Assurance Mutuelle (‘Matmut’). This transaction was completed in
2025 with HSBC Assurances Vie (France)’s financial performance
consolidated into Matmut books. Based on this HSBC Assurances Vie
(France) was excluded from the Bank’s DMA for 2025.
Similarly, HSBC Continental Europe's retained retail portfolio of home
and other loans was sold during 2025, following the sale of the retail
banking business in 2024. Accordingly, it has been excluded from the
Bank’s DMA for 2025. For further details refer to ‘Note 2 Assets held
for sale, liabilities of disposals groups held for sale and discontinued
operations’ on page 212.

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Sustainability Statement

List of material IROs
HSBC Continental Europe identified 26 material IROs through the DMA, which include 6 entity specific IROs. Below is an overview of these,
with further details available in the relevant sections of this report on 'Climate change' page 66, 'Biodiversity and Ecosystems' page 75, 'Social'
page 83, 'Governance' page 93.

ESRS | Description | Impact Materiality | Financial Materiality
Positive | Negative | Risk | Opportunity
E1 – Climate change | Impact on climate change |  | u |  |
Impact on energy |  | u |  |
Reputational risk (including the risk of greenwashing) associated with misstatements and misalignment with targets |  |  | u |
Deterioration in credit worthiness of customers and valuations of investments due to climate change |  |  | u |
Regulatory compliance and legal risk that could arise from failure to comply with climate related regulations |  |  | u |
Opportunity for sustainable finance and investment |  |  |  | u
E4 – Biodiversity and Ecosystems | Impact on biodiversity driven by climate change |  | u |  |
Impact on ecosystem services |  | u |  |
S1 – Own Workforce | Building an inclusive workforce | u |  |  |
Career growth and progression | u |  |  |
Productive and skilled workforce |  |  |  | u
Work-life balance |  | u |  |
Adequate Wages 1 | u |  |  |
Active social dialogue | u |  |  |
Secure employment |  | u |  |
Data privacy (Entity Specific) | Right to privacy (Entity Specific)2 |  | u |  |
Compliance with data protection laws (Entity Specific)2 |  |  | u |
G1 – Business Conduct | Responsible corporate culture | u |  |  |
Conduct risk |  |  | u |
Speak-up culture |  |  |  | u
Anti-bribery and corruption |  | u |  |
Sanctions compliance (Entity Specific) |  | u |  |
Anti-money laundering (Entity Specific) |  | u |  |
Regulatory and reputational risk (financial crime) |  |  | u |
Cybersecurity (Entity Specific) |  | u |  |
Cybersecurity failures (Entity Specific) |  |  | u |

1 In 2025, HSBC Continental Europe has identified an additional material positive impact. For more details, please refer to section 'Social' on Page 83.
2 In 2025, material negative impacts and risks related to data privacy under S1 (Own Workforce) and S4 (Consumer and end users) have been consolidated and
reported as entity specific topics. For more details, please refer to section 'Social' on Page 83.
The current financial effects of
material risks and opportunities
Following the conclusion of the DMA, HSBC Continental Europe
carried out an analysis to understand if any of the material risks and
opportunities had given rise to a financial impact during the current
reporting period.
This process involved mapping the identified risks and opportunities
to any potential financial impact on HSBC Continental Europe’s
statement of financial position, financial performance, and cash flow,
to establish the key line items to be assessed.
This was followed by a data sourcing and analysis exercise across
each of the topic areas where a potentially known and observable
impact has been identified, to assess the financial effect of the
material risks and opportunities during the reporting period. From this
analysis HSBC Continental Europe noted that none of the material
risks or opportunities had a material financial effect in the current
reporting period.
Resilience of the strategy and
business model
The DMA exercise shows the wide range of material sustainability
impacts and risks to which HSBC Continental Europe is exposed,
either directly or indirectly through its relationships with customers
and other stakeholders. It also shows the opportunities that are
available to the Bank.
I n respect of these sustainability matters, HSBC Continental Europe
endeavours to ensure its strategy and business model, including the
products and services provided to its customers and risk
management processes, are adapted to regulatory requirements,
stakeholders and market expectations, which continue to evolve. In
doing so, the Bank aims to ensure its ongoing operational resilience
and to safeguard its ability to continue providing critical products and
services to its customers, affiliates, and counterparties.

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Sustainability Statement

Identifying key resilience risks
HSBC Continental Europe uses a comprehensive Risk Management
Framework across its organisation and across all risk types,
underpinned by its culture and values. This framework outlines the
key principles, policies, and practices that the Bank employs to
manage material risks, both financial and non-financial. As part of this
framework, the Bank uses a top and emerging risks process to
provide a forward-looking view of issues with the potential to
threaten the execution of its strategy or operations over the medium
to long term. It updates its top and emerging risks as necessary,
considering both internally driven and externally driven factors.
The main resilience risks for HSBC Continental Europe in 2025 were
data risk, technology and cyber security risk and third party risk. The
approach to risk management, including resilience risk, is detailed in
section 'Risk Management Framework' on page 125.
Ensuring B usiness Continuity
The Bank has a well-es tablished Business Continuity and Incident
Management programm e in place designed to protect its staff,
assets, processes, and customers in the event of an interruption to
normal business activities. Business Continuity plans cover
interruption scenarios including communicable disease, unavailability
of staff, unavailability of buildings, unavailability of IT services and
unavailability of key third party suppliers.
Business Impact Analysis ('BIA') and Business Continuity Plans are
signed off as fit for purpose by each department head and are
updated annually, or more frequently in case of material changes in
their structure or processes. Regular testing (including industry-wide
exercises) is carried out to ensure Business Continuity Plans remain
accurate, relevant, and fit for purpose. T hese plans have been
exercised successfully throughout various events in the last few
years (e.g. Covid crisis).
Overall Business Continuity lifecycle controls (business impact
analysis, plans, and exercises) for the region have been assessed as
effective and compliant against a Group appetite of 95 per cent
completion.
Resilience of the business model in relation to
environmental risks
Stress testing is the primary mechanism through which the Bank is
able to gain forward-looking insights into the resilience of its strategy
and business model. The overall approach that HSBC Continental
Europe adopts to Stress Testing is described in section 'Stress
Testing' on page 124. The stress testing program also includes
scenario analysis on the climate and nature risks faced by HSBC
Continental Europe (see 'Testing the resilience of the strategy and
business model in relation to climate change' and 'Testing the
resilience of the strategy and business model in relation to nature
risk' below).
In 2025, HSBC Continental Europe carried out stress tests covering
systemic and idiosyncratic shocks over the short and medium term
horizon (including as part of the local recovery plans and for specific
risk portfolios), the impact of macroeconomic downturns over the
five-year planning horizon (including the impact of different interest
rate paths) and potential transition and physical risk shocks from
climate and nature risk impacts under short, medium and long-term
horizons.
In all cases, stress test impacts were measured on the profit and loss
account, r isk-weighted assets and capital, and the outcomes were
presented to the HSBC Continental Europe Risk Committee.
These exercises help the Bank to gain a better understanding of its
potential resilience risks and feed into the determination of
appropriate capital buffers to ensure the Bank’s financial resilience
and ability to absorb shocks including those relating to its material
sustainability matters.
Impacts from climate scenario analysis were analysed across three
distinct timeframes and allow HSBC Continental Europe to monitor
potential risks to capital and its progress towards contributing to the
HSBC Group’s Net Zero Transition Plan. The scenario analysis covers
impacts over the short-term up to 2027; the medium-term from 2028
t o 2030; and long-term from 2031 to 2040. Time horizons were
amended to align with the HSBC Group’s reporting approach. The
nature of the scenarios, HSBC Continental Europe’s developing
capabilities, and limitations of the analysis lead to outcomes that are
indicative of climate change headwinds, although they are not a direct
forecast. Developments in climate science, data, methodology and
scenario analysis techniques continue to shape the Bank’s approach
and therefore conclusions of the analysis may change over time.
Testing the resilience of the strategy and
business model in relation to climate change
HSBC Continental Europe performs a scenario analysis exercise
which supports the assessment of the overarching strategic
resilience of HSBC Continental Europe’s business models in relation
to climate change.
The exercise is focused on the Bank’s downstream financed
emissions. In the 2025, for the climate scenario analysis exercise,
five scenarios were explored that were created to examine the
potential impacts from climate for HSBC Continental Europe. The
2025 exercise primarily focused on credit risk and non-financial risk
exposures, but it also assessed the impacts on other risks including
traded market risk, liquidity risk, and pension risk.
Climate risk scenarios
Climate scenario analysis focuses on the impacts on HSBC
Continental Europe’s customers across a range of potential climate
scenarios. The 2025 scenarios were internally created using external
publicly available scenarios as a reference, including those produced
by the Network for Greening the Financial System (‘NGFS’), the
Intergovernmental Panel on Climate Change (‘IPCC’) and the
International Energy Agency ('IEA'). Using these external scenarios as
a template, the scenarios were adapted by incorporating the unique
climate risks and vulnerabilities to which the Bank and its customers
across different business sectors and regions are exposed to within
the context of evolving policies and emerging climate risks. The
scenarios vary by severity to analyse how climate risks could impact
the Bank's portfolios.
The scenarios utilised to assess climate change impacts were:
– T he Below 2 Degrees scenario, which is consistent with the Paris
Agreement where net zero is achieved, but beyond the 2050
scenario horizon. It assumes that there will be an orderly and
gradual rise in the stringency of climate policies over time.
– The Current Commitments scenario, which assumes that there is a
slower-than-required transition to a net-zero economy, which is
reflective of the current pace of transition. The scenario is anchored
to existing governmental committed policies. This slow transition
scenario helps HSBC Continental Europe to inform the actions it
needs to take to reach the HSBC Group’s net zero ambition while
operating in a world that is not on a net zero pathway.

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Sustainability Statement

– The N et Zero scenario, which is consistent with the Paris
Agreement. This assumes that there will be orderly but
considerable climate action, limiting global warming to 1.5°C by
2100, when compared with pre-industrial levels.
– The Downside Physical Risk scenario, which is a stressed scenario
that contains significant global warming and physical risk events. It
also assumes that current climate policies are preserved but new
decarbonisation policies fail to be introduced and global warming
continues. This scenario allows HSBC Continental Europe to assess
physical risks associated with climate change over the long-term
horizon.
– The Severe Climate Stress scenario, which is a near term scenario
assessing the impacts of concurrent extreme 1-in-200 year physical
risk events, which begins with dry perils, consisting of heatwaves
and wildfires, in the first year and is followed by wet perils,
consisting of floods and storms, in the second year. This leads to a
policy response of accelerated climate action. This scenario, which
is assessed in the horizon up to 2030, is broadly aligned to NGFS'
"short-term" scenario narrative and is used to test HSBC Continental
Europe's capital resilience to extreme tail-end acute physical risk
events, combining downside climate, transition, and
macroeconomic risks.

+Physical risk Transition Risk+

| Climate Scenarios |
| Downside Physical Risk | Severe Climate Stress | Current Commitments | Below 2 Degrees | Net Zero
Scenario outcomes | Rise in global temperatures by 2100 (vs pre-industrial levels) | 4.2°C |  | N/A | 2.4˚c |  | 1.7˚c |  | 1.5˚c |
Rise in European temperatures by 2100 (relative to global increases) | Higher | p | N/A | Higher | p | Lower | q | Similar | u
| Scenario end point | 2050 | 2030 | 2050 | 2050 | 2050
Underlying assumptions based on global averages | European and Global Climate Actions | Already implemented polices only | Accelerated policies | Viable pledged policies | Gradually rising stringency of policies | Orderly transition
Assumed pace of technology change and adoption | Slow change | Moderate change | Limited progress | Moderate change | Fast progress in tech that enables net zero
Assumed socioeconomic impact | High | Very high | Moderate | Moderate to High | High
|  | 2030 | 2040 | 2030 | 2030 | 2040 | 2030 | 2040 | 2030 | 2040
Underlying assumptions based on European averages | Assumed European carbon price ($/tCO 2 ) | 72 | 72 | 113 | 93 | 156 | 113 | 208 | 284 | 711
Assumed % change in European GDP since 2020 | 29% | 55% | 21% | 32% | 65% | 32% | 69% | 32% | 70%
Assumed % change in European energy consumption since 2020 | 1% | (5)% | (1)% | (5)% | (17)% | (1)% | (16)% | (13)% | (31)%
% renewable energy mix in Europe | 28% | 38% | 32 % | 30% | 45% | 32% | 48% | 39% | 68%
Scenario risk characteristics | Climate risk | Physical | p | Higher | p | Higher | u | Moderate | q | Lower | q | Lower
Transition | q | Lower | p | Higher | u | Moderate | p | Higher | p | Higher

Portfolio scope and methodology
The assessment of scenario outcomes is largely focused on credit
risk, examining the capability of the Bank’s clients to absorb the cost
of transition and physical risk events. The internal climate scenario
analysis uses models to assess how transition and physical risks may
impact HSBC Continental Europe’s portfolios under different
scenarios. The models for the Bank’s CIB portfolios are focused on
transition risk factors and incorporate a range of climate-specific
metrics that could have an impact on customers, including expected
production volumes, revenue, costs and capital expenditure. For the
commercial real estate portfolio, the Bank’s models are focused on
physical risk factors, including property locations, perils and insurance
coverage when assessing the overall credit risk impact to the
portfolio.
Beyond credit risk, the analysis also covers other risks HSBC
Continental Europe may face as a result of climate change, including
non-financial risks, liquidity risk, pension risk, and traded market risk.
Impacts observed during the scenario analysis exercise were minimal
across these risk types.
Outcome of climate scenario analysis
The modelled outputs from the internal climate scenario analysis
exercise suggest that HSBC Continental Europe’s CIB lending
portfolio could see increases in credit losses due to climate change.
This year, the exercise benefited from a significantly higher
prevalence of customer transition plans used in modelling, allowing
HSBC Continental Europe to place more emphasis on how its
customers expect to transition to net zero within its approach.

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Sustainability Statement

The results for the CIB portfolio also suggested that in the short and
medium term, HSBC Continental Europe expects climate-related
financial impacts to remain relatively muted, but to increase in the
long term particularly under the Below 2 Degrees scenario, where
transition risks grow at a faster rate. A key risk driver comes from the
phasing out of climate-related government subsidies and ‘free carbon
allowances’ within the EU, introducing a potential situation where
some of HSBC Continental Europe's customers may lose their
competitive advantages.
The most significant climate-related financial impacts are expected
across a few key sectors, this includes: the power and utilities; oil
and gas; and metals and mining sectors which is largely driven by
high carbon emissions intensity of customers in these sectors and
the high climate transition costs. Impacts are most severe for
counterparties with existing weaknesses in their balance sheet and
who do not have robust transition plans. The automotive sector was
also impacted due to the increased competition in the Electric Vehicle
market.
The analysis of HSBC Continental Europe’s commercial real estate
portfolio revealed that climate physical risks pose limited additional
impacts to credit risk in the short and medium term. The largest
portfolio is in France where coastal inundation from storm-driven tidal
surges and riverine flooding due to overflowing riverbanks is a key
physical risk peril within certain regions of the country. Only a small
proportion of the portfolio is exposed to these hazards, resulting in
minimal additional financial exposure. HSBC Continental Europe's
clients typically hold diversified commercial real estate portfolio, and
property elevation serves as a key mitigator, making the portfolio
more resilient to both chronic and acute physical risks.
While climate-related losses for HSBC Continental Europe are
expected to remain limited in the short and medium term, they are
likely to increase in the longer term. This is largely driven by the
transition to a net zero economy. This is particularly noticeable under
scenarios such as the Below 2 Degrees and Net Zero scenarios
where clients exposed to transition risk in HSBC Continental Europe's
portfolio are most impacted.
Climate-related losses can be mitigated through active management
approaches, which include identifying new climate-related business
opportunities and adapting lending portfolios to reduce exposure to
climate risks and losses. HSBC Continental Europe continues to
enhance its methodology to improve the effectiveness of its climate
scenario analysis.
Testing the resilience of the strategy and
business model in relation to nature risk
In 2025, HSBC Continental Europe conducted a nature scenario
analysis exercise focused on the wholesale lending portfolio, which is
part of the Bank’s downstream value chain, and the impact of nature
events on counterparties in key sectors exposed to nature risk up to
2040. Modelling covered all wholesale sectors that were identified as
having high nature risk exposures and has identified limited financial
impacts from nature risk for HSBC Continental Europe.
Due to the limited industry development and availability of external
data, nature scenario analysis remains nascent and further work to
expand and enhance the analysis will be conducted in future years.
Nature risk scenarios
HSBC Continental Europe has developed three scenarios, expanding
on the existing climate scenarios with nature variables sourced from
available third-party frameworks and publications as follows:
– Nature Positive scenario where orderly action is taken with a
concerted effort through a wide range of global policies (aligned
with the Global Biodiversity Framework’s 30 by 30 target) drives
rapid investment in biodiversity restoration and sustainable
practices.
– Nature Baseline scenario with a gradual shift of public and policy
attention towards nature risks. The moderate policy approach aims
to stabilise ecosystems degradation but lacks transformative
impacts.
– Nature Destruction scenario where limited policy action and
investments lead to severe degradation of natural ecosystems.
Outcome of nature risk scenario analysis
The results of the nature scenario analysis exercise were impacted by
the very limited number of nature-focused transition plans from many
of the Bank’s clients and from the early stage of industry thinking
around nature risk. The results do not currently indicate that the
current business model and strategy will not remain resilient in
respect of nature-related risks.
Results revealed that HSBC Continental Europe's portfolio sectors
most impacted through nature scenario analysis exercise were the
agriculture; power and utilities; and food, beverage and tobacco
sectors, which were largely driven by the high dependency on water
resources by customers in these sectors.
Overall, across the portfolio, HSBC Continental Europe expects
financial impacts relating to nature to remain minimal in the short and
medium term but could increase in the longer term, especially for
sectors with high resource dependency. The results highlight the
importance of supporting clients in developing their nature transition
plans, especially those with high water dependency.
Overall resilience to environmental risks
The results of the scenario analysis exercises reveal that climate
change and nature impacts on their own do not reveal material risks
to HSBC Continental Europe’s resilience and strategy in the short to
medium term, however, could act as a contributing factor which
worsens the impacts of a wider macroeconomic shock.
Scenario analysis supports the Bank in identifying how to mitigate
potential climate-related losses through active management
approaches, which include identifying new climate-related business
opportunities and adapting its portfolios to reduce exposure to
climate risks. In line with the HSBC Group’s net zero ambition, HSBC
Continental Europe will continue to work with its clients around the
development of their transition plans. This will support future
improvements to the Bank’s scenario analysis capabilities enhancing
how it assesses the resilience of its business models to both climate
change and nature risk.
u Further details on the mitigating actions taken by HSBC Continental Europe
can be found in the 'Managing climate-related risks' section of this
disclosure.

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Sustainability Statement

Assumptions and limitations underpinning
the environmental scenario analysis approach
Given current capabilities, environmental scenario analysis exercises
rely on a significant set of assumptions and limitations, which may
constrain the reliability and robustness of resulting outputs.
Outcomes may change in the future, potentially materially, as
capabilities improve.
Assumptions that HSBC Continental Europe uses within its
environmental modelling approach includes the following:
– Scenario analysis is conducted on counterparties with sufficient
data and extrapolated to the remaining portfolio. It assumes that
there is a broadly consistent environmental risk profile across each
portfolio.
– Climate transition risk impacts are assumed to be limited for sectors
that HSBC Continental Europe has assessed as having a low
climate transition risk exposure.
– For the climate models, HSBC Continental Europe's customers will
successfully execute their transition plans, where those plans are
assessed as credible. For the nature models, customer transition
plans (such as efforts to improve their water efficiency) are not
currently considered in modelling.
– Customers in certain wholesale sectors are assumed to pass some
of their costs relating to higher transition-risk related prices (carbon
price for climate risk and pollution charges for nature risk) through
to their own customers. These pass-through rates are based on
externally calibrated pass-through rates and reviewed by internal
sector experts.
– State support will continue for government-owned or government-
backed customers, and for customers providing essential goods
and services critical to societal functioning.
There are industry wide limitations, particularly through data
availability, although out models are designed to produce outputs that
can support assessment of the level of HSBC Continental Europe's
resilience to environmental risks.
– Data availability – Environmental scenario analysis is a data intensive
exercise, and the required information is only available for a subset
of the HSBC Group’s exposures. In particular there are a number of
environmental-related financial data gaps relating to reliable forward-
looking climate and nature aligned data.
– Scenario limitations – In assessing climate risk, there are inherent
uncertainties in the ways scenarios are designed which are largely
attributed to the limited history of the interactions between
environmental risks and the economy. Scenarios consider a range
of possible future outcomes however, quantifying the full effects of
all climate-related outcomes such as the effects of potential tipping
points remains challenging. In assessing nature risk, industry
standard scenario data is not currently available.
– Modelling uncertainties – There are inherent limitations within
climate and nature models due to the challenges of modelling (with
any precision) how environmental-related interactions (both physical
and transition risks) will manifest. These include estimating how
policy changes, carbon pricing or new technologies will impact
specific customers and how these customers will adapt. These
limitations are further compounded as the modelled time horizon
lengthens and the uncertainties behind higher-order impacts,
however internal judgements are used to mitigate some of these
effects.
The wholesale climate methodology for the non-real estate portfolios
did not consider the potential impacts from climate-related physical
risk, second order supply chain impacts, the volatility of commodity
prices, and how climate risks are correlated between sectors.
The wholesale climate physical risk methodology did not include the
indirect impacts of such as supply chain disruption, the risk of
stranded assets. Capabilities are being developed to capture these
effects.
The wholesale nature methodology did not consider second order
supply chain impacts or how nature risks are correlated between
sectors.
How the environmental scenario analysis
approach is being enhanced
HSBC Continental Europe continues to enhance its methodology to
improve the effectiveness of its environmental scenario analysis by
incorporating lessons learnt from previous exercises, feedback from
key stakeholders, which includes internal stakeholders as well as
external regulators, and by assessing the direction of general industry
practices.
Several key enhancements have been made across climate scenario
development, climate risk modelling, which includes improvements
to cashflow models, and more granular assumption regarding the
creation of carbon prices. HSBC Continental Europe has also
improved the embedding of outputs from climate scenario analysis
exercises into its Risk Management Frameworks.
In 2025, improvements within the wholesale lending climate
modelling process included targeted improvements made in 2025 to
oil and gas, automotive, emission-based models, and the continued
enhancement of customer transition plans. These support
improvements in the quality of modelled outcomes.
HSBC Continental Europe will continue to explore the impacts on its
portfolio from a nature risk perspective and expect its modelling
capabilities to evolve over time.
Risk management and internal
controls over sustainability reporting
Risk management and internal controls system over sustainability
reporting are covered in HSBC Continental Europe’s comprehensive
‘Risk Management Framework’ detailed section on page 125. This
framework is used across all risk types and outlines the key
principles, policies and practices that the Bank employs in managing
material risks, both financial and non-financial. Sustainability reporting
has been integrated into the Bank’s risk taxonomy under the financial
and regulatory reporting risks to manage the risk of misstatement in
sustainability reporting that may arise as a result of errors in
interpretations and judgements used in the reporting of information
or material information not reported or presented correctly and
consistently in line with the requirements.
The Risk Assessment approach applied in accordance with HSBC
Risk Management Framework implies a Risk and Control
Assessment based on an inherent risk assessment, which
corresponds to the most significant risk scenario that can occur in the

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Sustainability Statement

next 12 months without considering the control in place, the overall
control environment assessment and the residual risk assessment,
which corresponds to the level of risk remaining considering the
control system in place. The HSBC Risk Prioritisation Matrix is used
for the assessment of inherent and residual risks considering the
likelihood and impacts (customer, financial, reputational, and
regulatory).
HSBC Continental Europe’s internal controls incorporate
requirements for addressing the most materials risks of
misstatement in sustainability disclosures mainly in the areas of data
and interpretations. Data, methodologies, and assumptions that
HSBC have used may evolve over time in line with new regulation
requirements exposing HSBC Continental Europe to the risk of using
incomplete and inaccurate data or unavailability of data. To support
the sustainable reporting control environment and to meet evolving
sustainable risk environment, a framework was developed to guide
control implementation over sustainability reporting disclosures and
several strategic programmes are designed and executed.
– Data availability, quality and accuracy, and efforts to improve these
aspects: High quality, consistent, comparable, and accessible ESG
data is critical for informed decision making and for tracking and
reporting the HSBC Group’s progress towards net zero. To support
this, the HSBC Group continues to develop and implement a robust
data strategy, which includes re-architecting its technology and
operational processes.
Some of the challenges the HSBC Group aims to overcome include:
– Lack of standardised definitions: Inconsistent industry definitions
hinder the ability to source comparable data on customer
performance in net zero and broader ESG metrics.
– Fragmented data sources: ESG data comes from a wide variety of
sources and formats, complicating data collection, consolidation,
and vendor selection.
– Data gaps and proxy usage: Data gaps, both internally and across
the industry often require reliance on models and proxies, which
introduces uncertainty and reduces transparency
– Regulatory complexity: Operating on a global scale across multiple
jurisdictions expose to a diverse and evolving set of regulatory
requirements that must be carefully managed.
– Building a centralised ESG data capability: The HSBC Group
continues to strengthen its ESG data and analytics capability,
delivering trusted data assets, dashboards, AI, and advanced
analytics solutions that help support initiatives like financed
emissions, climate scenario analysis, stress testing, sustainable
finance and portfolio optimisation. Feedback received from
regulators and stakeholders continues to help inform improvements
in the robustness of HSBC Group processes and wider data
strategy. The HSBC Group seeks to embrace new technology that
enhances data quality monitoring and harness AI capabilities to help
improve data gaps to achieve business outcomes. HSBC
Continental Europe leverages the ESG data and analytics capability
to help streamline and support its sustainability related data needs,
from regulatory reporting through to business use cases.
– As the landscape for sustainability disclosures develops, HSBC
Continental Europe continues to focus on horizon scanning and
interpretation of relevant external reporting requirements, to ensure
a timely response for producing the required disclosures. As the
volume and nature of these requirements continue to evolve, the
level of risk is heightened. Part of HSBC Continental Europe's
response to this heightened risk includes undertaking a range of
assurance procedures over these disclosures.
– HSBC Continental Europe recognises the importance of
sustainability disclosures and the quality of data underpinning them.
The Bank also acknowledges that the internal processes to support
ESG disclosures are in the process of being developed and
currently rely on manual sourcing and categorisation of data. Certain
aspects of HSBC Continental Europe's sustainability disclosures are
subject to enhanced verification and assurance procedures
including the first, second and third line of defence. Assurance
review assists in reducing the risk of restatement, although it
cannot be fully eliminated given the challenges in data, evolving
methodologies and emerging standards.
A number of forums support the oversight of the control environment
for sustainability reporting and disclosures. These include the Audit
Committee, the Risk Management Meeting ('RMM'), the ESG
Disclosure Steering Committee, the Sustainability Execution Group
(‘SEG’) and the Prudential Policy Interpretation Working Group
(‘PPIWG’), among others. Attendees are HSBC Continental Europe
OpCo members including the CFO and CRO. These Committees
receive updates on the control environment, progress made on
remediation of significant deficiencies and review the impact on
financial and regulatory reporting risks. This oversight helped the
Committees to understand the progress being made by management
to set out strategic actions to remediate identified issues and uplift
the control environment to enable a sustainable reduction in risk.

Governance of sustainability matters
C omposition and expertise of the
Board and the General Management
related to sustainability matters
HSBC Continental Europe’s Board of Directors and General
Management provide the foundation for its commitment to strong
governance and oversight of sustainability matters. By bringing
together a diverse mix of expertise, perspectives, and experiences,
these bodies define and ensure the effective oversight of the
s trategy and operations while fostering accountability and innovation.
As of 31 December 2025, the Board was made up of 11 Directors,
one of whom was an executive member and the remaining 10 were
non-executive members. From a gender perspective, there were six
women (55 per cent) and five men (45 per cent). On 31 December
2024, the Board was composed of 15 Directors, one of whom was an
executive member and the remaining 14 were non-executive
members, totalling 53 per cent women and 47 per cent men.
The General Management comprised three Effective Managers
(‘Dirigeants effectifs’), i.e. the Chief Executive Officer (‘CEO’),
Andrew Wild, assisted by two Deputy Chief Executive Officers
(‘Directeurs Généraux Délégués’), Christopher Davies and Joseph
Swithenbank. From a gender perspective, there were three men (100
per cent).
Andrew Wild stepped down from his role as CEO and Director of
HSBC Continental Europe on 31 December 2025. Christopher Davies
has taken over as CEO ad interim from 1 January 2026 until the
appointment of a new CEO.
u For further information about the composition of HSBC Continental
Europe’s governance bodies, refer to the 'Corporate Governance Report'
section on page 18, including the information on Board members elected by
employees as well as the independence of Board members (on page 24).

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Sustainability Statement

The experience of the members of HSBC Continental Europe’s Board
and General Management covers all sectors, products and
geographic locations of the Bank. The Board is regularly engaged on
sustainability topics through presentations during regular meetings,
interactive workshops and continuous education programmes,
including mandatory training to stay at the forefront of evolving global
topics. For a detailed description of the experience of each Board and
General Management member, refer to the 'Corporate Governance
Report' on page 18.
To further enhance the Board’s expertise to oversee sustainability
matters, the shareholders’ meeting on 11 October 2024 appointed a
new independent non-executive Director to the Board of HSBC
Continental Europe: Kerstin Lopatta. She brings deep and extensive
sustainability reporting skills and expertise to the Board, in particular
given her experience with the European Financial Reporting Advisory
Group (‘EFRAG’). As a member of the Board’s Audit Committee, she
advises on key areas relating to sustainability, including the approach
to ESG reporting.
The General Management can also access sustainability experts in
the HSBC Group Sustainability Centre of Excellence, who are
represented in HSBC Continental Europe Corporate Sustainability
function, which reports to the Head of ESG Execution. The Head of
ESG Execution sits on the SEG and on the RMM.
R oles and responsibilities of the
Board and the General Management
related to sustainability matters
Sustainability matters are integral to monitoring and guiding the
strategy, to ensure the long-term viability of the business model. As
such, the Board of Directors and the General Management integrate
sustainability considerations into strategy setting, business decisions,
and risk management processes.
The Board of Directors
The Board holds collective responsibility for overseeing sustainability
matters including the Bank’s tracking of progress towards ambitions.
This role is formalised in its t erms of reference. The Board is regularly
updated on sustainability topics, including at its quarterly meetings,
and with advice provided by management to the Risk Committee,
and Audit committee on relevant sustainability matters.
The Board also sets HSBC Continental Europe’s values and principles
and oversees the implementation and maintenance of a code of
conduct or similar, and effective policies to identify and manage
matters related to business conduct.
The General Management
The General Management leads the Bank, and each of its members
has the power to act as its representative towards third parties. It is
comprised of the three Effective Managers listed in the section
above. In particular, the CEO has the widest powers to act on the
Bank’s behalf in all circumstances within the limits of its corporate
object and of the internal delegation of authorities framework, and
subject to those powers expressly conferred by law on the collective
body of shareholders and on the Board of Directors.
The HSBC Continental Europe CEO is responsible for implementing
processes, controls, and procedures to monitor, manage, and
address sustainability matters effectively. Those responsibilities are
delegated to three functions, all of them reporting to the HSBC
Continental Europe CEO:
– The Head of ESG E xecution, in charge of ESG strategy and
transformation
– The Chief Financial Officer (‘CFO’), in charge of financial reporting,
including sustainability reporting, as per the EBA Guidelines on
internal governance (EBA/GL/2021/05)
– The Chief Risk Officer (‘CRO’), in charge of risk management,
including sustainability risks, as per the EBA Guidelines on internal
governance (EBA/GL/2021/05)
These responsibilities are exercised through committees and forums,
including the following:
– Sustainability Execution Group: The overarching committee at
executive level responsible f or setting out and executing the ESG
strategy, supervising the implementation of ESG regulations, and
providing senior oversight of all risk activities related to the
management of ESG risks of HSBC Continental Europe. It is chaired
by the HSBC Continental Europe CEO and the Head of ESG
Execution, and includes all HSBC Continental Europe OpCo
members as attendees including the CFO and CRO, as well as
other permanent members. The SEG reports to the HSBC
Continental Europe OpCo and to the RMM.
– ESG Disclosures Steering Committee: The committee at executive
level responsible for overseeing and monitoring the delivery of
external ESG disclosures for HSBC Continental Europe and its
subsidiaries. It is chaired by the HSBC Continental Europe CFO. The
ESG Disclosures Steering Committee reports locally into the SEG.
The respective roles and responsibilities are defined in the terms of
reference of each governance forum.
Controls used to manage sustainability matters and inform the
General Management include the ESG Key Management Information
(‘KMIs‘) and the sustainability-related risk indicators. The KMIs on
climate and nature risks are important metrics to measure the
evolution of the sustainability strategy across HSBC Continental
Europe on areas such as people/culture, regulatory, and own
operations. They are reported quarterly to the SEG and on a semi-
annual basis at the HSBC Continental Europe RMM. The
sustainability-related risk indicators reflect the aggregate level of
c limate and nature risk that HSBC Continental Europe is willing to
assume within its risk capacity, in line with its business model, to
achieve its strategic sustainability objectives. Each key risk indicator
has an appetite and tolerance threshold against which the metric is
measured and monitored. Key risk indicators are reported quarterly to
the SEG, the HSBC Continental Europe RMM and the Risk
Committee.
Embedding the double materiality
assessment into HSBC Continental Europe’s
governance
The General Management regularly monitored the progress of the
DMA through workshops, ESG Disclosures Steering Committee, the
SEG and the OpCo. Management informed the Board of the DMA
process and of the principles guiding the assessment, and submitted
the final list of material IROs, which the Board approved. For further
information on the DMA process, including the list of material IROs,
see ‘The double materiality assessment process’ on page 50.

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Sustainability Statement

Integrating sustainability criteria into
compensation
HSBC Continental Europe’s approach to remuneration seeks to
incentivise its employees to deliver on its business strategy, including
key sustainability matters. As a subsidiary of the HSBC Group, the
general principles of HSBC Continental Europe’s remuneration policy,
which applies to all employees, including General Management, are
aligned with the broader framework approved by the HSBC Group’s
remuneration committee, while also ensuring compliance with local
r egulations. The section 'Company remuneration policy' within the
Corporate Governance Report outlines the role of the HSBC Group
Remuneration Committee in setting the policy and the interaction
between HSBC Continental Europe and the HSBC Group (refer to
page 34 for more details).
Climate and nature-related risks are embedded into the remuneration
policies and practices of the HSBC Group, including HSBC
Continental Europe. At a global level, sustainability-related risks,
among which climate and nature-related risks, are factored when
determining variable pay pools taking into consideration performance
against the risk appetite.
Variable compensation
The determination of the HSBC Group variable pay pool is a
discretionary process informed by various financial and non-financial
metrics, affordability, and the commercial requirement to remain
competitive in the market. Performance against metrics in the HSBC
Group RAS and conduct framework are taken into consideration in
setting the pool as part of the review of non-financial metrics, which
includes the consideration of sustainability-related risks. There is no
fixed percentage of remuneration tied to these targets, but rather
they are among the criteria considered as part of an overall
assessment of business performance.
In most HSBC Continental Europe business lines and functions,
specific climate objectives are assigned directly to managers at the
start of the year. Objectives are usually linked to the climate ambition
of the Bank, developing sustainable finance, and supporting clients in
their transition to net zero. In many cases, these objectives are
cascaded down to their teams or specific employees. To assess
performance against these objectives, HSBC Continental Europe
monitors a set of key performance and risk indicators, covering HSBC
Continental Europe as a whole or specific to business lines and
functions. Such indicators include themes related to emissions,
consumption, waste, sustainable finance and investment, training.
In 2025 for instance, all staff across HSBC Continental Europe were
assigned an objective to complete at least three climate-related
training modules on nature and biodiversity out of 11 proposed to
improve collective awareness and understanding of climate risks. The
completion of these sustainability goals forms part of the annual
performance assessment of each individual which determines the
associated performance rating impacting pay decisions.
For HSBC Continental Europe in France, the profit-sharing agreement
signed in 2025 incorporates, for the fourth consecutive year, an
environmental component focused on climate-related objectives. This
agreement is designed to acknowledge and encourage employees'
responsible use of resources, directly supporting the net zero
ambitions and reinforcing the commitment to sustainable business
practices. Each objective is accompanied by a specific profit-sharing
financial pool implemented on a progressive basis according to the
level of achievement of each objective.
Executive compensation
At HSBC Continental Europe, all OpCo members — including the
General Management — are assigned collective and/or individual
objectives that promote a positive, inclusive culture and support the
transition to net zero. These objectives are defined, measured, and
weighted within their annual performance scorecards, including for
example:
– Goal related to focus on clients and people (10 per cent weighting):
'Build the workplace of the future and be people's employer of
choice, especially for talent'. This goal includes objectives such as:
achieving employee engagement desired outcome, delivering
inclusion index desired outcome, reducing high performer voluntary
attrition and delivering initiatives in talent development/retention.
– Goal related to financial performance (10 per cent weighting): 'Grow
Banking Financial performance sustainably'. This goal focuses on
supporting HSBC Group's stated transition to net zero ambition
through its own operations and through supporting clients in their
transition and their supply chains, and includes objectives such as:
achieving energy consumption reduction desired outcomes,
achieving business travel emissions reduction desired outcome,
and complete trainings on environmental topics.
As with all staff, Board members elected by employees were
assigned the objective of completing climate-related training
modules. Apart from the Board members elected by employees,
there was no variable component to the remuneration of the non-
executive members of the HSBC Continental Europe Board of
Directors as most of them are external members.

Additional mandatory disclosures
under CSRD
Following the completion of its DMA, HSBC Continental Europe
mapped the mandatory disclosure requirements and data points
within the ESRS to its material IROs to assess the materiality of
information. Where no linkage was found between a specific
requirement and a material IRO, the information in that disclosure
requirement or data point has not been disclosed.
In line with this assessment, the tables below li st all of the ESRS
disclosure requirements across ESRS 2 and the five topical standards
which are deemed material to HSBC Continental Europe. Some
disclosure requirements, covered in the Bank's 'Universal
Registration Document' are incorporated by reference as indicated in
the table below.

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Sustainability Statement

ESRS 2 General Information
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
BP-1 and BP-2 | General basis for preparation of the sustainability statement & Disclosures in relation to specific circumstances | N | Background to the sustainability statement | 46
Additional notes on the preparation of this statement – estimation and time horizons | 65
Material sustainability impacts, risks and opportunities | 50
Total Emissions | 73
Characteristics of HSBC Continental Europe’s workforce | 84
GOV-1 | The role of the administrative, management and supervisory bodies | Y | Governance of sustainability matters | 58
GOV-2 | Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
GOV-3 | Integration of sustainability-related performance in incentive schemes | N | Integrating sustainability criteria into compensation | 60
GOV-4 | Statement on sustainability due diligence | N | Statement on due diligence | 65
GOV-5 | Risk management and internal controls over sustainability reporting | N | Risk management and internal controls over sustainability reporting | 57
SBM-1 | Strategy, business model and value chain (products, markets, customers) | Y | Strategy, business model and value creation | 46
SBM-2 | Interests and views of stakeholders | N | Engaging with stakeholders to inform our strategy | 49
SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | N | Material sustainability impacts, risks and opportunities | 50
IRO-1 | Description of the process to identify and assess material impacts, risks and opportunities | N | The double materiality assessment process | 50
IRO-2 | Disclosure requirements in ESRS covered by the undertaking’s sustainability statement | N | Additional mandatory disclosures under CSRD | 60
MDR-PAT | Minimum Disclosure Requirements pertaining to Policies, Actions and Targets | These requirements are disclosed in the respective topical standards sections

Environment Standard – E1 Climate Change |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2, GOV-3 | Integration of sustainability-related performance in incentive schemes | N | Integrating sustainability criteria into compensation | 60
ESRS 2, SBM-3 | Material impacts, risks and opportunities, and their interaction with strategy and business model | N | Testing the resilience of the strategy and business model in relation to climate change | 54
ESRS 2, IRO-1 | Description of the processes to identify and assess material climate-related impact, risks and opportunities | N | Climate change-related impacts, risks and opportunities | 66
E1-1 | Transition plan for climate change mitigation | N | Transition plan for climate change | 66
E1-2 | Policies related to climate change mitigation and adaptation | N | Addressing climate-related impacts, risks and opportunities through policies and actions | 69
E1-3 | Actions and resources in relation to climate change policies | N | Addressing climate-related impacts, risks and opportunities through policies and actions | 69
E1-4 | Targets related to climate change mitigation and adaptation | N | Embedding the transition to net zero in the way the Bank operates | 71
E1-5 | Energy consumption and mix | N | Energy consumption and mix | 74
E1-6 | Gross Scopes 1, 2, 3 and Total GHG emissions | N | Greenhouse gas emissions | 71

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Sustainability Statement

Environment Standard – E4 Biodiversity and Ecosystems |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2, SBM-3 | Material impacts, risks and opportunities, and their interaction with strategy and business model | N | Biodiversity and ecosystems-related impacts, risks and opportunities | 75
ESRS 2, IRO-1 | Description of the processes to identify and assess material biodiversity and ecosystem-related impact, risks, and opportunities | N | Biodiversity and ecosystems-related impacts, risks and opportunities | 75
E4-1 | Transition plan and consideration of biodiversity and ecosystems in strategy and business model | N | Strategy, business model and value creation | 46
N | Testing the resilience of the strategy and business model in relation to nature risk | 56
E4-2 | Policies related to biodiversity and ecosystem | N | Policies | 76
E4-3 | Actions and resources related to biodiversity and ecosystem | N | Actions | 77
E4-4 | Targets related to biodiversity and ecosystem | N | Targets | 77

Social Standard – S1 Own Workforce |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2 SBM-2 | Interests and views of stakeholders | N | Engaging with stakeholders to inform our strategy | 49
ESRS 2, SBM-3 | Material impacts, risks and opportunities, and their interaction with strategy and business model | N | Social impacts, risks and opportunities | 83
S1-1 | Policies related to own workforce | N | HSBC Continental Europe’s workforce | 84
S1-2 | Processes for engaging with own workers and workers’ representatives about impacts | N | Being a responsible employer | 85
S1-3 | Processes to remediate negative impacts and channels for own workers to raise concerns | N | Navigating business transformation | 90
S1-4 | Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions | N | Employment Practices and Relations Policy | 86
S1-5 | Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities | N | We value difference | 88
S1-6 | Characteristics of the company’s employees | N | Characteristics of HSBC Continental Europe’s workforce | 84
S1-8 | Collective bargaining coverage and social dialogue | N | Fostering social dialogue | 86
S1-9 | Diversity metrics | N | Metrics | 88
S1-10 | Adequate wages | N | Acting to ensure adequate wages | 88
S1-14 | Health and Safety metrics | N | Health and Safety Policy | 86
S1-16 | Compensation metrics (pay gap and total compensation) | N | Gender pay gap and remuneration ratio | 88
MDR | Minimum Disclosure Requirements on Data privacy (entity specific) | N | Protecting customer and employee data | 91

Governance Standard – G1 Business Conduct |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2, GOV-1 | The role of the administrative, supervisory and management bodies | N | The Board of Directors | 59
ESRS 2, IRO-1 | Description of the processes to identify and assess material impacts, risks and opportunities | N | Governance impacts, risks and opportunities | 93
G1-1 | Corporate culture and Business conduct policies | N | Business conduct | 100
Corporate culture | 93
Whistleblowing and ‘Speak-up’ culture | 96
G1-3 | Prevention and detection of corruption and bribery | N | Global Financial Crime Policy | 97
G1-4 | Confirmed incidents of corruption or bribery | N | Investigating credible incidents | 97
MDR | Minimum Disclosure Requirements on Financial Crime and Cybersecurity (entity specific) | N | Preventing financial crime Safeguarding data - Cybersecurity | 96 98

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Sustainability Statement

Data points that derive from other EU legislation
The table below includes all of the datapoints that derive from other EU legislation as listed in ESRS 2 appendix B.

Data point | SFDR | Pillar 3 | Benchmark Regulation | EU Climate Law | Section | Page
Board's gender diversity | u |  |  |  | Composition and expertise of the Board and the General Management related to sustainability matters | 88
Percentage of board members who are independent | u |  |  |  | Corporate Governance Report | 58
Statement on due diligence | u |  |  |  | Statement on due diligence | 65
Involvement in activities related to fossil fuel activities | u |  |  |  | Not applicable 1 |
Involvement in activities related to chemical production | u |  |  |  | Not applicable 1 |
Involvement in activities related to controversial weapons | u |  |  |  | Not applicable 1 |
Involvement in activities related to cultivation and production of tobacco | u |  |  |  | Not applicable 1 |
Transition plan to reach climate neutrality by 2050 |  |  |  | u | Not applicable 2 |
Undertakings excluded from Paris-aligned Benchmarks |  | u | u |  | Not applicable 2 |
GHG emission reduction targets | u | u | u |  | Not applicable 2 |
Energy consumption and mix | u |  |  |  | Energy consumption and mix | 74
Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) | u |  |  |  | Not applicable 2 |
Energy intensity associated with activities in high climate impact sectors | u |  |  |  | Not applicable 2 |
Gross Scope 1, 2, 3 and Total GHG emissions | u | u | u |  | Total emissions | 73
Gross GHG emissions intensity | u | u | u |  | GHG intensity is based on HSBC Continental Europe's total net revenue | 73
GHG removals and carbon credits |  |  |  | u | Not applicable 2 |
Exposure of the benchmark portfolio to climate-related physical risks |  |  | u |  | Not applicable 3 |
Disaggregation of monetary amounts by acute and chronic physical risk, Location of significant assets at material physical risk |  | u |  |  | Not applicable 3 |
Breakdown of the carrying value of its real estate assets by energy- efficiency classes |  | u |  |  | Not applicable 3 |
Degree of exposure of the portfolio to climate-related opportunities |  |  | u |  | Not applicable 3 |
Amount of each pollutant listed in Annex II of the E-PRTR Regulation emitted to air, water and soil | u |  |  |  | Not applicable 4 |
Water and marine resources | u |  |  |  | Not applicable 4 |
Dedicated policy | u |  |  |  | Not applicable 4 |
Sustainable oceans and seas | u |  |  |  | Not applicable 4 |
Total water recycled and reused | u |  |  |  | Not applicable 4 |
Total water consumption in m3 per net revenue on own operations | u |  |  |  | Not applicable 4 |
Activities negatively affecting biodiversity-sensitive areas | u |  |  |  | Not applicable 4 |
Land degradation, desertification, soil sealing to disclosure rules on sustainable investments | u |  |  |  | Not applicable 4 |
Natural species and protected areas | u |  |  |  | Not applicable 4 |
Sustainable land / agriculture practices or policies | u |  |  |  | Not applicable 4 |
Sustainable oceans / seas practices or policies | u |  |  |  | Not applicable 4 |
Policies to address deforestation | u |  |  |  | Not applicable 4 |
Non-recycled waste | u |  |  |  | Not applicable 4 |
Hazardous waste and radioactive waste | u |  |  |  | Not applicable 4 |
Risk of incidents of forced labour | u |  |  |  | Not applicable 4 |
Risk of incidents of child labour | u |  |  |  | Not applicable 4 |
Human rights policy commitments | u |  |  |  | HSBC Human Rights Statement | 85

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Data point | SFDR | Pillar 3 | Benchmark Regulation | EU Climate Law | Section | Page
Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 |  |  | u |  | HSBC Human Rights Statement | 85
Processes and measures for preventing trafficking in human beings | u |  |  |  | HSBC Human Rights Statement | 85
Workplace accident prevention policy or management system | u |  |  |  | Not applicable 2 |
Grievance/complaints handling mechanisms | u |  |  |  | Whistleblowing and ‘Speak-up’ culture | 95
Number of fatalities and number and rate of work-related accidents | u |  | u |  | Not applicable 4 |
Number of days lost to injuries, accidents, fatalities or illness | u |  |  |  | Not applicable 4 |
Unadjusted gender pay gap | u |  | u |  | Gender pay gap and remuneration ratio | 88
Excessive CEO pay ratio | u |  |  |  | Gender pay gap and remuneration ratio | 88
Incidents of discrimination | u |  |  |  | Not applicable 4 |
Non-respect of UNGPs on Business and Human Rights and OECD | u |  | u |  | Not applicable 4 |
Significant risk of child labour or forced labour in the value chain | u |  |  |  | Not applicable 4 |
Human rights policy commitments | u |  |  |  | Not applicable 4 |
Policies related to value chain workers | u |  |  |  | Not applicable 4 |
Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines | u |  | u |  | Not applicable 4 |
Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 |  |  | u |  | Not applicable 4 |
Human rights issues and incidents connected to its upstream and downstream value chain | u |  |  |  | Not applicable 4 |
Human rights policy commitments | u |  |  |  | Not applicable 4 |
Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines | u |  | u |  | Not applicable 4 |
Human rights issues and incidents | u |  |  |  | Not applicable 4 |
Policies related to consumers and end-users | u |  |  |  | Protecting customer and employee data | 91
Non-respect of UNGPs on Business and Human Rights and OECD guidelines | u |  |  |  | Not applicable 2 |
Human rights issues and incidents | u |  |  |  | Not applicable 2 |
United Nations Convention against Corruption | u |  |  |  | Global Financial Crime Policy | 96
Protection of whistleblowers | u |  |  |  | Whistleblowing Policy | 96
Fines for violation of anti-corruption and anti-bribery laws | u |  | u |  | Approach to mitigating financial crime | 97
Standards of anti-corruption and anti-bribery | u |  |  |  | Approach to mitigating financial crime | 97

1 Not applicable for Financial Institutions.
2 Not applicable during the reporting year.
3 Adopting phase-in provision.
4 Not material as per DMA.

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Statement on due diligence
Due diligence is integral to HSBC Continental Europe operations, ensuring compliance, accuracy, and transparency in every aspect. The Bank
has conducted thorough due diligence process for all the disclosures presented in the Sustainability Statement.
The below table provides a mapping of the information provided in its sustainability statement about the due diligence process.

Core elements of due diligence | Sections in the sustainability statement | Page
a) Embedding due diligence in strategy and business model | Strategy and business model | 46
b) Engaging with affected stakeholders in all key steps of the due diligence | Engaging with affected stakeholders to inform our strategy | 49
c) Identifying and assessing adverse impacts | Material sustainability risks, impacts and opportunities | 50
d) Taking actions to address those adverse impacts | Respective sections of the Climate, Social and Governance where actions and tracking of effectiveness are disclosed. | 69, 71, 86, 88, 93, 98
e) Tracking the effectiveness of these efforts and communicating

Additional notes on the preparation of this statement – estimation and
time horizons
HSBC Continental Europe i n some cases has us ed estimates for the
reporting of Scope 3 emissions, based on widely accepted
framewor ks and industry standards available at the time of reporting.
Such metrics may be subject to a high level of measurement
uncertainty due to data challenges, evolving methodologies and
emerging standards. The effective measurement, governance and
reporting of Scope 3 emissions relies heavily on the availability and
quality of external data. The Bank's internal processes to support ESG
disclosures continue to be developed and currently partly rely on
manual sourcing and categorisation of data. This, coupled with
diverse external data sources and complex structures, further
complicates data consolidation. Methodologies, data, scenarios and
industry standards may evolve over time in line with market practice,
regulation or developments in science, and where applicable, HSBC
Continental Europe aims to continue to review its approach.
As data improves and coverage expands, estimates can be replaced
with reported figures.
HSBC Continental Europe addresses the requirements of Article
L22-10-35 of the French Commercial Code in the social and
governance sections of this statement.
HS BC Continental Europe uses the following three distinct
timeframes for qualitative assessment to assess its financial
materiality on c limate and nature sustainability matters. This aligns
with the time horizons of the internal risk management processes;
– Short term up to 2026
– Medium term from 2027 to 2035
– Long term from 2036 to 2050
The quantitative DMA for Nature on HSBC Continental Europe’s
wholesale, liquidity and traded risk portfolios utilises ENCORE
materiality scores which uses 1 year timefra me.

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Sustainability Statement

Environmental
Climate change
The HSBC Group's ambition is to become a net zero bank by 2050.
Supporting HSBC customers is core to the strategy, with financing
their transition playing a key role in achieving the net zero objectives.
As a material subsidiary of the HSBC Group, HSBC Continental
Europe actively contributes to the achievement of the HSBC Group’s
ambition by managing its own emissions, providing and facilitating
sustainable finance and investment for clients, and investing in the
scaling up of emerging climate technologies.
Transition plan for climate change
The updated Net Zero Transition Plan, released in November 2025,
sets out detail on how the HSBC Group plans to meet its ambition to
become a net zero bank by 2050. It also outlines the outcome of its
review of its interim 2030 financed emissions targets, metrics and
associated policies. This milestone reflects its continued ambition to
become a net zero bank by 2050.
The updated plan intensifies the HSBC Group efforts to be:
– Customer focused: further aligning their strengths, capabilities and
capital more closely to their customers’ evolving transition needs.
– Commercial: pursuing with greater clarity the growing opportunities
the transition affords their customers, shareholders, and the
economies they serve.
– Agile: leveraging their simpler structure and responding
pragmatically to a dynamic external environment.
u For more details on the Net Zero Transition Plan, please refer to 'Transition
to net zero' on page 47.
HSBC Continental Europe does not have an entity-level transition plan
under the relevant ESRS and continues to review its approach to
transition planning in line with regulatory requirements, available
guidance, and industry practice. HSBC Continental Europe is taking
entity-level actions to contribute to the HSBC Group Net Zero
Transition Plan. This includes: the way that it supports its customers,
both through customer engagement and the provision of financing
solutions (refer to page 69), the way that it operates as an
organisation, including risk management (refer to page 124), policies
(refer to page 69) and own operations (refer to page 71), and how it
partners externally in support of systemic change (refer to page 69).
Climate change-related impacts, risks
and opportunities
HSBC Continental Europe has identified six material climate change
related IROs through its DMA, which are connected to its own
operations, upstream and downstream value chain.

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Negative Impact | Impact on climate change Through its downstream financing and investing activities the Bank has exposure to high-emitting sectors, such as fossil fuels, power utilities, infrastructure, transportation and heavy industry. The emissions from these sectors result in adverse climate impacts, accelerating global warming and complicating efforts to cap global temperature rises. | Short/Medium/ Long Term | Downstream
Negative Impact | Impact on energy Through its downstream financing and investing activities the Bank is exposed to energy-intensive sectors, such as power utilities, infrastructure, transportation and heavy industry. These sectors have a fossil fuel driven energy mix which can be a challenge to transition and could have a negative impact on the overall transition to a more sustainable energy mix. | Short/Medium/ Long Term | Downstream
Risk | Reputational risk (including the risk of greenwashing) associated with misstatements and misalignment with targets HSBC Continental Europe’s key stakeholders - such as investors, customers, regulators, and society at large are placing growing importance on its alignment with climate objectives and expect the Bank to effectively manage climate-related risks. Misrepresentation or failure to meet these expectations could expose the Bank to reputational damage, greenwashing risk and litigation. | Short/Medium/ Long Term | Own Operations Upstream Downstream
Risk | Deterioration in credit worthiness of customers and valuations of investments due to climate change HSBC Continental Europe may be affected by climate-related transition risk through its business activities such as exposure to carbon intensive borrowers that may find it challenging to transition, thus threatening the long term viability of their business models and impacting their credit worthiness and/or market value. This may lead to a risk of credit losses across lending and investment activities, and impacts on asset valuations and capital. HSBC Continental Europe may also be affected by climate-related physical risk through its business activities, such as exposure to borrowers in regions vulnerable to acute and chronic climate events, resulting in disruption of businesses and stranded assets. This exposure may also result in elevated credit risk across financing activities, and impacts on asset valuations and capital. | Medium/Long Term 1 | Downstream

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Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Risk | Regulatory compliance and legal risks could arise from failure to comply with climate-related regulations HSBC Continental Europe must comply with an increasing number of climate related regulations and reporting requirements. Ineffective response to regulatory change, breach of regulatory compliance reporting, or failure to manage data privacy regulations, could result in reputational, regulatory compliance and legal risks. | Short/Medium/ Long Term | Own Operations Upstream Downstream
Opportunity | Opportunity for sustainable finance and investment The transition to a sustainable and resilient economy presents the Bank with a growth opportunity. By integrating ESG principles across its products and services, the Bank has the opportunity to meet the rising demand for sustainable finance and investments thereby improving financial performance through increased market share and access to new client segments. | Short/Medium Term | Downstream

1 Following the sale of the insurance business in 2025, the risk has changed from being material in the short term (insurance) and medium to long term
(wholesale) to being material only in the medium and long term (wholesale business).
HSBC Continental Europe utilised both qualitative and quantitative
methods to identify and assess its climate change-related IROs,
including climate scenario analysis and stress testing. These
assessments were designed to help HSBC Continental Europe
understand where it may have material impact on climate change,
both directly and indirectly, and how climate risks or opportunities
may impact its operations, financial performance, stability, and
reputation. See ‘Resilience of the business model in relation to
environmental risks’, page 54 for full details of the Bank’s climate-
related scenario analysis programme.
The tools and parameters used to assess climate change-related
IROs varied by business line, given the differences in how each of
these areas may impact, or may be impacted by climate change.
Given the enduring nature of greenhouse gas emissions, all negative
impacts associated with climate change were designated as ‘difficult
to remedy’ or ‘long-term to remedy’.
Assessment of materiality through HSBC
Continental Europe’s value chain
Corporate and Institutional Banking
Through its downstream CIB activities, HSBC Continental Europe has
exposure to high-emitting sectors, such as fossil fuels, power and
utilities, infrastructure, transportation, and heavy industry. This may
pose both physical and transition risks for the Bank and its clients.
See 'Climate and Nature risks' section, page 178 for more
information.
For CIB customers, particularly those in sectors with elevated
transition risks, are engaged through a comprehensive Transition
Engagement Questionnaire ('TEQ'). The TEQ collects information to
assess these customers’ alignment with the transition to net zero
and their exposure to both physical and transition risks. Responses
inform how HSBC Continental Europe understands the climate risks
of its key wholesale relationships and helps inform how the Bank
engages its customers to support them to mitigate these risks.
See 'Supporting customers' transition in high emitting sectors', page
69 for more information. To assess the impacts of its wholesale loan
portfolio on climate change, HSBC Continental Europe leveraged the
information gathered through the TEQ process along with the client's
level of current greenhouse gas ('GHG') emissions data. Where
emissions data was unavailable, proxy analysis and estimated data
points were used to complete the assessment.
Cli mate-related financial risk was assessed both qualitatively and
quantitatively with the use of climate scenario analysis outputs to
gain insights into the long-term effect of transition and physical risk
across the wholesale banking portfolio. See 'Climate Risk Scenarios',
page 54 and 'Climate and Nature risk' page 178 for more information
on how climate risks may impact principal risk types associated with
wholesale banking.
Market risk
The potential impact of climate risk on the Bank’s market risk has
been assessed with a review performed of each traditional financial
risk type (Equity, Foreign Exchange, Interest Rate, Credit Spread
notably).
Climate events can expose the Bank to potential losses from
financing high-risk geographies affected by tighter regulations or
extreme weather events, as well as from fluctuating asset values tied
to carbon-intensive sectors.
Therefore, HSBC Continental Europe performed its financial
materiality assessment on its traded book based on a country
analysis for the physical risks and transition risk and a sector analysis
for the transition risks. Internal and external data sources, including
climate studies and published indexes from international bodies,
were used to make these country and sector analyses.
Liquidity risk
H SBC Continental Europe undertook an assessment to understand
the impact that climate risk may have on its liquidity position. This
assessment was made up of two components:
– Qualitative assessment: to understand the potential impact that a
climate risk event may have for each liquidity risk driver, over a
short-term horizon.
– Quantitative assessment: to identify the potential impacts of
climate physical risk and greenwashing risk on the two main
liquidity risk drivers (deposits outflow and committed facilities
drawdown), the analysis was completed with an internal climate
liquidity stress testing which assessed the impact of a potential
greenwashing event and physical risk event on HSBC Continental
Europe’s liquidity position impacting notably deposits and undrawn
commitments from high-risk sectors, over a 90-day scenario.
Interna tional Wealth and Premier Banking
Transition risk was considered across the HSBC Private Bank
(Luxembourg) S.A. mortgage portfolio on its energy performance
grade. Financial risks resulting from chronic or acute climate physical
risk events were assessed as exposure to following natural hazards:
wildfire, flood, bio-diversity and water stress.
1 HSBC Asset Management in context of the section 'Assessment of the materiality through HSBC Continental Europe’s value chain' includes HSBC Global Asset
Management (France), HSBC Global Asset Management (Deutschland) GmbH and HSBC Global Asset Management (Malta) Ltd.
2 INKA (Internationale Kapitalanlagegesellschaft mbH) a subsidiary of HSBC Continental Europe S.A., Germany, specialises in fund administration with an AIF and
UCITs management license by Federal Financial Supervisory Authority (BaFin), operating in Germany.

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HSBC Bank Malta p.l.c has assessed transition and physical risk for
its retail mortgage portfolio. For the transition risk assessment, the
properties' energy performance certificate ratings are now being
captured at origination and the energy performance distribution of the
portfolio is monitored.
For the physical risk assessment, flood risk is considered for both sea
level rise and flash floods.
HSBC Continental Europe has downstream investment activities
across multiple parts of its IWPB business, namely HSBC Asset
Management 1 and INKA 2 within CIB. The primary driver of climate
impact in these businesses is exposure within their portfolios to high-
emitting sectors, such as fossil fuels, power utilities, infrastructure,
transportation, and heavy industry.
As with CIB activities, these financed emissions may result in
adverse climate impacts.
To assess these impacts, HSBC Asset Management and INKA
leveraged the MSCI Impact Materiality Assessment, which highlights
the most material negative and positive impacts for 163 Global
Industry Classification Standard (‘GICS’) sub-industries across ESRS
subtopics. This provided a binary view of the materiality of a given
topic based on the sector/industry breakdown of the client assets
under management (‘AuM’).
Neither HSBC Asset Management nor INKA is directly exposed to
financial risks such as market risk, credit risk or liquidity risk since
risks and/or opportunities related to their investing activities would
primarily impact their clients' investments. HSBC Asset Management
and INKA monitor and manage such risks and opportunities on behalf
of their clients’ investments. However, qualitative results of the Risk
and Control Assessments for Non-Financial Risks were considered in
the DMA assessment.
The assessment of climate-related impact on non-financial risks, such
as compliance risk, resilience risk, financial reporting risk or legal risk,
is performed on an annual basis across HSBC Asset Management
and INKA to ensure the identification of potential material climate-
related risks faced by each business.
HSBC Continental Europe’s own operations
The impacts of HSBC Continental Europe’s operations on climate
change were assessed using Scope 1 and Scope 2 GHG emissions
as a measure, particularly from energy use in its buildings and data
centres and the heating, ventilation, and air conditioning (‘HVAC’)
systems used to cool or heat its premises. In addition, select Scope 3
emissions from its upstream value chain were also considered,
including business travel and those relating to purchased goods and
services from suppliers and capital goods.
To identify and assess potential climate risks within its operations,
the Bank used climate scenario analysis to understand the potential
climate related expected losses. This was supported by the analysis
performed on the Bank's critical properties to climate change which
combines physical hazard, vulnerability and financial risk modelling on
a long term time horizon. The exercise aimed to assess the impact of
physical risks on HSBC Continental Europe's operations resulting
from climate related events and to identify potential adverse impacts
on business continuity.
The assessment considered the potential effect of physical climate
hazards–such as droughts, freeze-thaw, water stress, wildfire, fluvial
and pluvial flooding and tropical cyclone with a focus on
reinstatement costs using long term climate scenarios (Downside
Physical, Current Commitments, Below 2°C) and Economic Capital
using the severe climate stress scenario.
As a credit institution and Public Interest Entity, HSBC Continental
Europe is exposed to reputational and regulatory compliance risks.
This is driven by increasing expectation, and scrutiny from investors,
customers, regulators and wider society regarding the Bank’s
activities and their alignment with national and international climate
goals, as well as those set by the HSBC Group.
As such, these risks were considered during the qualitative
materiality assessment. See ‘The double materiality assessment
process’, page 50, for more details. This risk identification and
assessment process was also supported in 2025 by an internal
scenario analysis performed to identify and evaluate the impact of
climate change on the business under Financial Reporting and
Regulatory Compliance risks (Greenwashing) and Resilience risks
(Physical). See 'Non-Financial Risk' section of the Risk report of
Universal Registration Document and Annual Financial Report 2025,
page 171, for more details.
HSBC Continental Europe’s supply chain
The HSBC Group undertook an assessment of its suppliers’ carbon
emissions including HSBC Continental Europe's suppliers and is
encouraging its largest suppliers to make their own net zero
commitments, and to disclose their emissions via the CDP (formerly
the Carbon Disclosure Project) supply chain programme.
Improvement in the measurement, quality and reporting of HSBC
Continental Europe's supply chain emissions data continue to
generate insights to drive targeted reduction activities.
The HSBC Group has engaged with its 300 highest-emitting suppliers
to collaborate and identify opportunities for emissions reduction,
tailored to each supplier’s maturity level. Each year, the HSBC Group
also assesses third-party risk materiality by considering the potential
impact of a climate risk event within the next 12 months.
The supply chain remains the largest source of operational emissions,
presenting the HSBC Group with its most significant decarbonisation
challenge and reflecting the broader pace of transition across the real
economy. The HSBC Group’s Sustainable Procurement Procedure
supports sourcing teams to further integrate sustainability into
sourcing strategy and decisions, including new supplier selection,
renewals, and ongoing supplier management. Suppliers working with
the HSBC Group are at different stages in their sustainability
journeys. The HSBC Group aims to support these suppliers as they
transition, while also navigating external factors and challenges. The
initial focus has been on engaging suppliers about the importance of
decarbonisation and setting clear expectations through the Supplier
Code of Conduct, with HSBC Continental Europe having adopted the
HSBC Group’s initiative to ensure that contractors, consultants, and
external service providers align with the Bank’s culture, strategic
priorities, and evolving standards. In 2025, HSBC Continental Europe
continued its data gathering efforts through CDP to understand their
environmental impact. The HSBC Group is continuously working to
3 HSBC Continental Europe's actions are not reliant on specific resources and not attributed to financed emissions reductions, as doing so could result in
overstated impacts, including risk of greenwashing and double counting.
4 Asset Management’s Energy and Thermal Coal Policies including their application can be found here: https://www.assetmanagement.hsbc.lu/en/professional-
clients/about-us/responsible-investing/policies.

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strengthen collaboration with suppliers, particularly those without
public disclosures or emission reduction plans, by providing additional
guidance and support. Alongside its net zero operations ambition, the
HSBC Group aims to be a responsible consumer of natural resources
across its operations and supply chain.
Addressing climate-related impacts,
risks and opportunities through
policies and actions
Supporting customers’ transition in high
emitting sectors 3
HSBC Continental Europe recognises that it has an important role to
play in supporting the transition to a net zero global economy.
As a financial institution, HSBC Continental Europe is focused on
making choices that do not just deliver progress towards portfolio
emissions targets, but also lead to a meaningful impact on emissions
reduction in the real economy. This means supporting customers in
high emitting sectors whose transformation is key to a net zero
economy.
Corporate and Institutional Banking
CIB seeks to actively engage with its clients on their climate
strategies and risks. In 2025, it pursued this strategic dialogue with
its higher transition risk and/or largest corporate customers through
the completion of a TEQ performed annually. This questionnaire
contains specific, climate- and nature-focused questions to support
HSBC Continental Europe in understanding the level of climate and
nature risk in each client’s business and their transition strategy. CIB
is using the data collected to engage with its clients and identify
additional business opportunities that could support their transition to
net zero.
HSBC Continental Europe’s front-line bankers have been equipped
with augmented insights dashboards to enrich engagement and
identify opportunities to support customers. In addition, the
continued use of transition plan assessments helps identify deeper
customer needs, guiding the development of customised products
and solutions.
Sustainability risk policies
HSBC Continental Europe applies, where relevant, the HSBC Group’s
sustainability risk policies, including Thermal Coal Phase-Out policy
and Energy policy. These policies are integral to the HSBC Group’s
broader Risk Management Framework and are important
mechanisms for managing risks, including delivering the HSBC
Group’s net zero ambition. They focus on mitigating reputational,
credit, legal and other risks related to the Bank's customers’
environmental and social impacts.
Senior members of the HSBC Group Risk and Compliance function
have oversight of the development and implementation of
sustainability risk policies across global businesses and functions. In
addition, senior members of HSBC Continental Europe’s Risk
function oversee the implementation of these policies for the entity.
The policies were first published in December 2021 for the Thermal
Coal Phase-Out policy, and in December 2022 for the Energy policy,
and are reviewed annually. The most recent update, in November
2025, ensures they more effectively support the HSBC Group Net
Zero Strategy and address associated risks.
Thermal Coal Phase-Out policy
The policy seeks to achieve two objectives: to phase out the
financing of thermal coal-fired power and thermal coal mining by 2030
in markets in the European Union (‘EU’) and Organisation for
Economic Cooperation and Development (‘OECD’), and by 2040 in
other markets (Phase-Out Commitment), and to identify and manage
risks arising from the provision of financing or advisory services to
customers with thermal coal assets.
Energy policy
The HSBC Group's energy policy applies to the broader energy
system, including upstream oil and gas, fossil fuel power generation,
hydrogen, renewables and hydropower, nuclear, biomass, and energy
from waste sectors. The policy seeks to achieve two objectives: to
help drive global greenhouse gas emissions reductions, both to
achieve a net zero HSBC portfolio and to support customers in the
transition to a net zero global energy future, and to identify and
manage risks arising from the provision of financing or advisory
services to customers with energy assets.
Engaging with clients to deepen understanding of and support their
transition plans
HSBC Continental Europe recognises that facilitating its customers'
transition to net zero is essential for achieving sustainability goals.
This approach enhances long-term value for both customers and
shareholders while aligning with the organisation’s strategic
objectives. CIB adopts a comprehensive strategy to understand and
support the unique transition journeys of its clients. By integrating
portfolio management and transaction decisions with personalised
engagement, CIB aims to assist its clients in their transition
pathways.
In 2025, HSBC Continental Europe continued to actively engage with
clients on their climate strategies and risks, leveraging the revised
Global Sustainable Finance & Transition ('SF&T') strategy, with
sustainable finance as its most crucial pillar. Through collaboration
with corporate and institutional clients, CIB achieved significant
sustainable finance volumes including high-profile ESG coordination
mandates in both the ESG Bond and Sustainable Lending markets.
For more details on sustainable finance, refer to 'Financing the shift
to a sustainable economy' on page 70.
HSBC Continental Europe also established strategic partnership s to
support clients through their transition journeys, including a
collaboration with EcoVadis in France to help wholesale banking
customers address and reduce Scope 3 emissions. CIB also
expanded its ESG Directory, connecting customers with trusted third-
party providers to support their sustainability goals in areas such as
strategy, regulatory disclosure, and energy efficiency. These
initiatives have helped customers adapt to the changing sustainability
landscape.
Asset Management
Asset Management’s Energy and Thermal Coal Policies 4 have been
developed in support of the HSBC Group’s net zero ambition. Under
its Energy Policy, HSBC Asset Management aims to engage with and
assess transition plans of listed issuers responsible for around 70 per
cent of relevant emissions covering listed equity and corporate fixed
income issuers managed within its major investment hubs. Asset
Management undertakes engagement and assessment of the oil,
gas, power, and utilities issuers in this group.

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Its Thermal Coal Policy is developed in support of the transition from
thermal coal-fired power and thermal coal mining (collectively
‘thermal coal’) within the 2030/40 timelines set out in the HSBC
Thermal Coal Phase-Out Policy.
The Energy Policy and Thermal Coal Policy are reviewed at least
annually. Oversight of the application of these policies is conducted
as part of Asset Management’s sustainability governance framework.
Engagement with priority issuers on climate topics
In 2025, Asset Management continued its engagement with investee
companies to understand and support their management and
disclosure of climate change risks and opportunities. Its engagement
strategy targets priority investee companies, as defined in its
Stewardship Plan. Through engagement activities, Asset
Management supports issuers in their transition journey and tracks
improvements in their alignment classifications over time.
Implementing fund rules
HSBC INKA has implemented specific investment rules in several
funds, for example, exclusions with regards to coal and in some
cases other fossil energy sources.
Funds can also apply rules with regards to carbon reduction, invest in
target funds which are classified according to Articles 8 or 9 of the
Sustainable Finance Disclosure Regulation ('SFDR') or invest in
sustainable bonds. The business plans to continue to implement
further ESG criteria in fund rules over the coming years.
Stewardship
When exercising its voting rights on management proposals, member
re-elections and executive remuneration, HSBC INKA considers
investee companies’ approaches to climate change based on its
Principles of exercising voting rights, BVI voting rules (German fund
industry association) and Glass Lewis ESG voting rules.
During 2025, these principles and voting rules were considered when
dealing with investee companies and will continue to be considered
when exercising the voting rights over the coming years.
Financing the shift to a sustainable economy
In 2020, the HSBC Group announced its ambition to provide between
USD 750 billion to USD 1 trillion in sustainable financing and
investment by 2030. This ambition aims to help promote green,
sustainable and socially-focused business, as well as sustainable
investing products and solutions.
Since 1 January 2020, HSBC Continental Europe’s cumulative
contribution to the HSBC Group target amounted to USD 152.5 bn on
31 December 2025, which represents 31 per cent of the HSBC
Group's total progress to date.
Managing climate risks
Both physical and transition risks related to climate change have the
potential to impact HSBC Continental Europe and its customers.
Climate risk is managed across HSBC Continental Europe traditional
risk types and activities and in line with the HSBC Group-wide Risk
Management Framework, covering governance, risk appetite,
customer and transaction level assessments, and scenario analysis.
This supports identification, assessment, mitigation, and monitoring
of risks associated with the transition, climate change, physical
impacts, and the execution of the HSBC Group's sustainability
ambitions, targets and commitments.
As outlined in section 'Climate and Nature risk management', page
178, an annual climate risk materiality assessment supports the
understanding of how climate risk may impact across the HSBC
Group’s risk taxonomy. It assesses the type of impact, likelihood, and
severity over a twelve-month period, and also considers forward-
looking risk impacts. It is used to support policy and control
enhancements, and scenario analysis. Sustainability risk policies form
part of the HSBC Group's broader Risk Management Framework and
are important mechanisms for managing risks, including delivering its
net zero ambition.
Reputational risk policy
The reputational impact of climate risk is managed through the HSBC
Group's broader reputational risk framework, supported by
sustainability risk policies and metrics.
Reputational risk is defined as the failure to meet stakeholder
expectations as a result of any event, behaviour, action or inaction,
either by the HSBC Group itself, its employees or those with whom it
is associated, that might cause stakeholders to form a negative view
of the HSBC Group.
The reputational risk policy is aimed at managing the sources and
drivers of reputational risk that may be encountered through the
Bank’s business activities. The policy seeks to achieve three primary
objectives:
– Potential reputational risks are identified and escalated as
appropriate.
– Roles and responsibilities relating to reputational risk management
are clearly defined, understood, and embedded.
– Senior management has visibility and oversight over reputational
risks.
The policy applies to all employees at HSBC Continental Europe.
HSBC Continental Europe sustainability risk managers provide local
policy guidance to relationship managers for the oversight of policy
compliance, and in support of implementation across CIB activities.
At a senior level, the CRO is accountable for assessing and deciding
reputational risk cases and the CEO owns and is accountable for the
management and mitigation of any residual reputational risk.
u For further details on sustainability risk policies, see page 69.
u For further details on the approach to reputational risk, see: https://
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-risk/
reputational-risk
Financial reporting risk policy
The financial reporting risk policy outlines the minimum requirements
to address financial reporting risk, including the risk of misstatement
in externally driven climate-related reporting and disclosures.
The purpose of this policy is to ensure consistent and appropriate
interpretation, measurement, and presentation of financial
information in relevant reports. This includes compliance with
applicable legal and regulatory frameworks which require HSBC
Continental Europe to publish financial reports and disclosures.
This policy sets out the principal financial reporting standards
applicable to HSBC Continental Europe. It is owned by the HSBC
Group CFO as the Global Risk Steward, and its implementation is
managed by HSBC Continental Europe’s Financial Controller for the
entity.

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Sustainability Statement

Wholesale credit risk policy
The wholesale credit risk policy establishes guidelines and criteria to
manage and mitigate the risks associated with providing credit to
wholesale clients. This includes wholesale credit risk driven by
climate transition and physical risks that HSBC Continental Europe
has identified as material through its DMA.
Within this policy, HSBC Continental Europe references its wholesale
credit risk assessment. The objective is to ensure that credit
extended to wholesale clients and counterparties aligns with the
Bank’s risk appetite approved by the Board. This includes
sustainability considerations, requiring wholesale credit risk
assessments (with stated exceptions) to evaluate clients’ exposure to
transition and physical risks associated with climate change.
The wholesale credit risk policy is owned by the Head of Wholesale
Credit Risk at the global level, whereas the local Credit Risk steward
assumes ownership at the entity level.
Risk analysis and modelling for climate risks
T he Bank has delivered further enhancements to the way climate
considerations are managed across the organisation. This has been
achieved through risk policy and guideline updates and further
development of HSBC Continental Europe risk metrics and
assessments to help monitor and manage exposures. Additionally, a
number of climate models have been reviewed, and internal climate
scenario analysis capabilities have been enhanced.
HSBC Continental Europe uses climate scenario analysis to gain
insights into the long-term effects of transition and physical risks
across its CIB portfolio. For more detail on how the Bank conducts
this analysis see page 54. For the most material CIB customers, the
TEQ is used to understand clients’ climate strategies and risks. A
suite of policies has been set out to guide the management of
climate risk. For each identified risk, a probability of occurrence and
potential impact are assessed based on a climate related event
representing the most plausible situation that could occur in the next
12 months. These assessments are performed by the first line of
defence and reviewed by the second line of defence as subject
matter of the risk assessed. In 2025, this analysis did not negatively
change the company's estimate of non-financial risks.
Addressing regulatory compliance risk
HSBC Continental Europe aligns its actions within the general
regulatory framework outlined in the section ‘Regulatory Compliance’
on page 176 and has adapted it to incorporate climate-related
regulatory compliance requirements.
Embedding the transition to net zero in the
way the Bank operates
The HSBC Group has the ambition to become a net zero bank by
2050, which includes its operations. In order to contribute to the
HSBC Group's ambition, HSBC Continental Europe is focused on the
following key objectives:
Reducing greenhouse gas emissions
In Germany and France, the office buildings continue to be operated
with the vast majority of electricity consumption being obtained from
renewable energy sources. HSBC Continental Europe also remains
engaged to reduce overall travel emissions year on year and updated
its travel policy in 2025, which now includes specific elements for
Germany and France to incentivise train travel over air.
Improving energy efficiency
In Malta, following the completion of the construction project named
HSBC HUB in 2024, HSBC Continental Europe continued to deliver
initiatives to reduce CO2 emissions and increase the Green Energy
quotient. As an example, the new operations centre located in Qormi
has been redeveloped and is on track to achieve LEED gold
certification. Additionally, in France and Germany, there has been a
focus in 2025 on reduction of office footprint (project to reduce floor
space at Coeur Défense in France, preparation for sub-leasing of
areas at Hansaallee in Germany).
Partnering with suppliers
HSBC Continental Europe continued gathering carbon emission data
from its suppliers through CDP and leveraged an additional data
collection source introduced in 2024 to simplify and expand supplier
outreach for Scope 3 data collection.
Measuring progress
As part of the Group’s ambition to become a net zero bank by 2050,
HSBC Continental Europe is taking entity-level actions to contribute
to the HSBC Group’s ambition. HSBC Group seeks to analyse and
track its financed emissions through specific RAS and KMIs and
HSBC Continental Europe is increasingly assessing its corporate
customers’ transition risks, outlined in 'Climate and Environmental
risks management' on page 178 and continues to review its approach
to entity-level targets in line with regulatory expectations or
requirements, available guidance, and industry practice.
Greenhouse gas emissions
HSBC Continental Europe considered the requirements of the
Greenhouse Gas Protocol Corporate Value Chain (Scope 3)
Accounting and Reporting Standard (Version 2011) and the calculation
guidance set out in the Partnership for Carbon Accounting Financial
(‘PCAF’) specifically Part A ‘Financed Emissions’.
The GHG Corporate Standard classifies the direct and indirect
emissions into three scopes.
Scope 1 represents the Bank’s direct emissions. Scope 2 represents
the indirect emissions resulting from the Bank’s use of electricity and
energy to run its business. Scope 3 represents indirect emissions
attributed to upstream and downstream activities. HSBC Continental
Europe’s upstream activities include business travel and emissions
from its supply chain including procurement of goods and services
and related transport. Downstream activities include those related to
investments and including financed emissions. Under the protocol,
Scope 3 emissions are broken down into 15 categories, of which
HSBC Continental Europe discloses emissions data for three related
to upstream activities. These are: purchased goods and services
(category 1), capital goods (category 2), and business travel (category
6). HSBC Continental Europe also reports data on downstream
activities for financed emissions (category 15).
5 Scope 1, 2 and Scope 3 category 6 emissions data covers all HSBC Continental Europe entities, located in markets that are onboarded on HSBC’s climate
reporting tool: France, Germany, Malta, and Poland (Poland is included from 2025). Data covers entities that are not consolidated under HSBC Continental
Europe, but they share premises with HSBC Continental Europe entities so cannot be excluded such as HSBC Global Services (UK) Paris Branch, HSBC Bank
plc, Paris Branch, HSBC Global Service UK Ltd – Malta Branch. HSBC Assurances Vie (France) is similarly included, as it shared premises with HSBC Continental
Europe entities. Scope 3 category 6 does not cover road travel data for Poland.

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Sustainability Statement

Scope 1 and Scope 2 emissions
Scope 1 and Scope 2 emissions represent the GHG emissions
associated with HSBC Continental Europe’s operations. The
emissions data is extracted using the HSBC Group’s environmental
tool Metrix. Data covers a 12-month period ending on September 30
and is gathered for the four key markets 5: France, Germany, Malta,
and Poland.
Scope 3 emissions categories 1, 2 and 6
Emissions from business travel (category 6) are tracked similarly to
Scope 1 and Scope 2 emissions, using the HSBC Group's
environmental reporting tool for the 12-month period ending on
September 30. Data covers HSBC Continental Europe’s operations in
France, Germany, Malta, and Poland.
HSBC Continental Europe’s supply chain emissions (categories 1 and
2) are calculated using a spend-based method under Greenhouse Gas
Protocol supplemented by supplier emissions data obtained through
CDP.
In the absence of reported emissions data for a supplier, or if the
supplier is not within the HSBC Group's 500 largest suppliers,
emissions are estimated using actual and modelled data from an
external provider.
If such data is not available, the revenue-based CDP industry average
for the supplier's primary activity is applied to derive the associated
emissions. Spend data covers the period from October 2024 till
September 2025.
Scope 3 emissions category 15
Financed emissions link the financing HSBC Continental Europe
provides to its customers and their activities in the real economy and
provides an indication of the associated GHG emissions. They form
part of HSBC Continental Europe’s Scope 3 emissions, which
includes emissions associated with the use of a company’s products
and services.
The DMA assessment has concluded that climate change mitigation
impact is material – for wholesale and asset management. As per
ESRS, only material topics have been considered for disclosure.
To determine the scope of activities for reporting, HSBC Continental
Europe considered the specified minimum boundary defined in the
GHG Protocol.
The amounts reported for financed emissions include the wholesale
banking book for known and unknown use of proceeds and where
data was available to make the assessment. This enables the scope
of activities to align with Pillar 3 disclosures on Financed emissions.
To calculate annual on-balance sheet financed emissions, HSBC
Continental Europe used drawn balances as of 31 December 2025
related to wholesale loans and advances to customers (corporate
loans) and financial assets that are not insurance related (corporate
debt). It represents a total of EUR 30.1 billion (2024: EUR 33.2 billion).
HSBC Continental Europe recognises that the methodology and data
used to assess financed emissions continue to evolve based on
industry guidance, market practices, and regulations. This may enable
the Bank to continue to review the scope of reporting such as
additional asset classes and activities listed as optional or not
addressed as per the GHG Protocol.
Data and methodology limitations
The Bank faces notable challenges in calculating financed emissions
due to the limited availability of comprehensive and reliable emissions
data. Most clients do not yet report emissions data at the granular
subsidiary level and the full scope of GHG emissions required in the
analysis, in particular Scope 3 emissions.
In the absence of client-reported emissions at the required granularity
covering all scopes of emissions, HSBC Continental Europe has
estimated emissions using proxies based on industry averages.
These industry averages may be defined at country, region or globally
based on the data available to calculate emission factors and may not
be country specific. Given financed emissions data is reliant on
industry averages, this may fluctuate year on year as data availability
and granularity improves.
To calculate the industry averages for financed emissions, there is a
reliance on external third-party vendor data sets and given the multi-
year lag noted for emissions availability, HSBC Continental Europe
has used emissions data from 2023 with a regional deflator to reduce
the use of a proxy and in order to minimise the data lag where
possible. Emissions factors are subject to volatility based on updates
to the underlying emissions data used as well as year on year
fluctuations in exchange rates.
Financed emissions have been calculated at the obligor level where
Nomenclature of Economic Activities ('NACE') code granularity exists
using industry averages, and where a NACE code is unavailable, a
weighted average portfolio emission factor has been applied. For
HSBC Continental Europe, financed emissions are calculated at the
individual obligor level and this may therefore differ between the
counterparty group sectors used for financed emissions reporting at
the HSBC Group leve l.
Additionally, the financing activities are treated as general corporate
purposes (i.e. unknown use of proceeds as defined by GHG Protocol)
due to data availability and limitations.
All parts of the value chain and all scopes of emissions have been
taken into account for financed emissions, and this may result in
double counting between sectors. Double counting occurs when
GHG emissions are counted more than once in financed emissions
analysis and cannot be avoided.
The methodology and approach to the scope of these calculations for
HSBC Continental Europe is not aligned with the HSBC Group
methodology and emissions figures will differ. This is to ensure
alignment with reporting requirements to expand coverage across a
wider range of sectors for disclosure purposes rather than focusing
on target setting for specific sectors, which is currently done at the
HSBC Group level.
Evolving approach
During 2025, HSBC Continental Europe updated its financed
emissions calculation approach to align more closely with the HSBC
Group approach. Additionally, the Bank also updated the industry
average data from ISS 2022 to ISS 2023. While the aggregated
impact of these changes on total financed emissions is not material,
the impact to some of the sectors as outlined in EBA Pillar 3
Template 1 are material. As a result, comparative figures for financed

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73

Sustainability Statement

emissions for 2024 have been restated to ensure consistency and
traceability across disclosures. Refer to the ‘Total Emissions’ table
below for details.
HSBC Continental Europe’s approach will evolve further based on
data and methodology improvements as well as future alignment
with updated industry guidance for methodologies. As data improves
and coverage expands, estimates can be replaced with reported
figures.

Total Emissions
| 2025 | 2024
tCO2e | Primary data source % | tCO2e | Primary data source %
Scope 1 GHG Emissions |  |  |  |  |
Gross Scope 1 GHG Emissions | tCO2e | 1,232 | N/A | 2,631 | N/A
Scope 2 GHG Emissions |  |  |  |  |
Gross location-based Scope 2 GHG Emissions 1 | tCO2e | 2,106 | N/A | 2,290 | N/A
Gross market-based Scope 2 GHG Emissions 1 | tCO2e | 1,264 | N/A | 1,557 | N/A
Scope 3 GHG emissions |  |  |  |  |
Category 1: Purchased goods and services | tCO2e,% | 30,344 | 17 | 38,141 | 8
Category 2: Capital goods | tCO2e,% | 924 | 72 | 621 | 26
Category 6: Business travel | tCO2e,% | 1,251 | 100 | 2,902 | 100
Category 15: Investments (Financed Emissions)2,3 | tCO2e,% | 20,725,440 | 0 | 21,625,305 | 0
Total Gross Scope 3 GHG Emissions | tCO2e,% | 20,757,959 | 0 | 21,666,969 | 0
Total GHG emissions |  |  |  |  |
Total GHG Emissions (location-based) | tCO2e | 20,761,297 | N/A | 21,671,890 | N/A
Total GHG Emissions (market-based) | tCO2e | 20,760,455 | N/A | 21,671,157 | N/A

1 The 2024 comparatives for GHG Emissions (gross location-based Scope 2 and gross market-based Scope 2) have been restated due to further methodology
enhancements at the HSBC Group level, increased data availability and correction of errors in data reporting. The restatement resulted in decrease of gross
location-based Scope 2 GHG emissions of 528 tCO2e which represents 19 per cent and increase of gross market-based Scope 2 GHG emissions of 305 tCO2e
which represents 24 per cent, compared to the figures reported for the previous year. The restatement of Scope 2 GHG emissions is directly related to the
restatement of energy consumption data, which is disclosed in the table 'Energy consumption and mix' on the page 74.
2 The 2024 comparatives for Scope 3 Category 15 (Financed emissions) have been restated primarily due to methodology enhancements. HSBC Continental
Europe also reflected the updated industry average data from ISS 2022 to ISS 2023. The restatement resulted in an increase in Scope 3 GHG emissions
(Category 15) by tCO2e 723,275 which represents 3 per cent, compared to the figures reported for the previous year. While the aggregated impact of these
updates on total financed emissions is not significant, the impact to certain sectors as outlined in EBA Pillar 3 Template 1 are material. For more details, please
refer to section 'Evolving approach' on page 72.
3 The Scope 3 Category 15 (Financed emissions) for the reporting year 2025, compared to the restated 2024 figures, reflect a net decrease of 4 per cent. This
reduction is primarily driven by a 14 per cent decline in financed emissions attributable to changes in exposure, partially offset by a 10 per cent increase
resulting from foreign exchange ('FX') rate movements.
GHG intensity is based on HSBC Continental Europe's total net revenue.
u For more details on the GHG Emissions calculation and methodology please refer to page 71.

GHG intensity based on net revenue
|  | 2025 | 2024
Total GHG Emissions (location-based) per net revenue | (tCO2e/ EUR) | 0.01 | 0.01
Total GHG Emissions (market-based) per net revenue | (tCO2e/ EUR) | 0.01 | 0.01

Alignment of GHG emissions intensity to financial reporting
|  | 2025 | 2024
Net Revenue used to calculate GHG intensity | Million EUR | 3,517 | 3,456
Net Revenue (other) | Million EUR |  |
Total net revenue (in financial statements)1 | Million EUR | 3,517 | 3,456

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
Contribution to the HSBC Group’s sustainable finance and investment 2030 ambition since 1 January 2020
The table below shows HSBC Continental Europe’s cumulative contribution to the HSBC Group’s sustainable finance and investment 2030
ambition since 1 January 2020 1,2,3

|  | 2020 | 2021 | 2022 | 2023 | 2024 | 2025
Total | $bn | 16.4 | 47.4 | 76.0 | 101.2 | 124.9 | 152.5

1 The 2025 data in this table has been prepared in accordance with the HSBC Group’s Sustainable Finance and Investment Data Dictionary 2025, which includes
green, social and sustainability activities. The amounts provided and facilitated include: the limits agreed for balance sheet-related transactions provided, the
proportional share of facilitated capital markets/advisory activities and the net new flows of sustainable investments within assets under management.
2 For green, social, and other sustainable use of proceeds, the capital markets products are aligned to the International Capital Markets Association's ('ICMA')
Green Bond Principles, Social Bond Principles or Sustainability Bond Guidelines or the Climate Bonds Initiative as applicable. The lending labelled products are
aligned to the Green Loan Principles ('GLP') or Social Loan Principles of the Loan Market Association ('LMA'), Asia-Pacific Loan Market Association ('APLMA')
and the Loan Syndications and Trading Association ('LSTA’) as applicable, or for sustainable trade instruments, are aligned to the HSBC Group's internal
sustainable trade instrument principles which are based on the GLP and reference the UN SDGs. Also included are facilities where the HSBC Group identifies
that the use of proceeds would meet eligibility criteria as defined and approved by appropriate governance committees, but these are not labelled or marketed
as green or social.
3 Data is presented in US dollars, as it is calculated at the HSBC Group level.

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Sustainability Statement

Energy consumption and mix
In addition to measuring emissions, HSBC Continental Europe
monitors its energy consumption as part of its effort to support the
HSBC Group’s net zero ambition.
Energy consumption data is reported for electricity, primary fuel
sources and locally generated energy sources with measurements
obtained via meters where possible and compiled from service
provider invoices. If metered data is only partially available or not
available, energy consumption may be calculated based on a
comparable property, extrapolation of cost per unit or estimates using
floor area or other published industry baselines.

Energy consumption and mix 1 |
|  | 2025 | 2024
Nuclear energy consumption |  |  |
Consumption from nuclear sources | MWh | — | —
Share of energy consumption from nuclear sources in total energy consumption | % | — | —
Renewable energy consumption |  |  |
Fuel consumption for renewable sources, including biomass | MWh | — | —
Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources 2 | MWh | 6,029 | 8,229
The consumption of self-generated non-fuel renewable energy | MWh | 120 | 189
Total renewable energy consumption 2 | MWh | 6,149 | 8,418
Share of renewable sources in total energy consumption 2 | % | 51 | 51
Total energy consumption 2 | MWh | 12,124 | 16,581
Renewable energy production |  |  |
Renewable energy production – Self generated | MWh | 120 | 189

1 Energy consumption and mix data covers all HSBC Continental Europe entities, located in markets that are onboarded on HSBC’s climate reporting tool: France,
Germany, Malta, and Poland (Poland is included from 2025). Data covers entities that are not consolidated under HSBC Continental Europe, but they share
premises with HSBC Continental Europe entities so cannot be excluded such as HSBC Global Services (UK) Paris Branch, HSBC Bank plc, Paris Branch, HSBC
Global Service UK Ltd – Malta Branch. HSBC Assurances Vie (France) is similarly included, as it shared premises with HSBC Continental Europe entities. Data
covers a 12-month period ending on September 30.
2 The 2024 comparatives for Energy consumption and mix (Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources,
Total renewable energy consumption, Share of renewable sources in total energy consumption and Total energy consumption) have been restated due to
further methodology enhancements at the HSBC Group level, increased data availability and correction of errors in data reporting. The restatement resulted in
decrease of Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources of 4,927 MWh which represents 37 per cent,
Total renewable energy consumption of 4,928 MWh which represents 37 per cent, Share of renewable sources in total energy consumption of 16 per cent,
Total energy consumption of 3,256 MWh which represents 16 per cent, compared to the figures reported for the previous year.
Exposures towards sectors that highly contribute to climate change
HSBC Continental Europe in its Capital and Risk Management Pillar 3
Disclosures, outlines its exposures towards non-financial corporates,
including loans and advances, debt securities and equity instruments
classified in the accounting portfolios in the banking book excluding
financial assets held for trading or held for sale assets.
The table below sets out the same aggregated exposure towards
sectors which highly contribute to climate change.
Ñ Refer to HSBC Continental Europe's Q4 2025 Capital and Risk Management
Pillar 3 Disclosures for detailed break-up of this exposure.

Exposures towards sectors that highly contribute to climate change 1 |
|  | 2025 | 2024
Gross carrying amount | Million EUR | 20,057 | 21,213

1 In accordance with the Commission delegated regulation (EU) 2020/1818 supplementing regulation (EU) 2016/1011 as regards minimum standards for EU
Climate Transition Benchmarks and EU Paris-aligned Benchmarks -Climate Benchmark Standards Regulation - Recital 6: Sectors listed in Sections A to H and
Section L of Annex I to Regulation (EC) No 1893/2006.

Nature
Nature and its ecosystem services are foundational to economic
growth, resilience and long-term value creation. Nature-related
opportunities and risks – which can stem from the impacts and
dependencies the global economy and financial system have on
nature, as well as the complex interactions and compounding effects
of climate change – are areas that require further consideration.
The HSBC Group has been developing its approach to nature, aligning
it with its net zero approach:
– Supporting customers, through financing and investing in nature-
related solutions.
– Starting to embed nature into the way the Bank operates, initially
through understanding its exposure to nature and managing nature-
related risk in the European business, and
– Partnering for a supportive enabling environment, for example
through t he Bank's nature-focuse d philanthropic partnerships.
In 2025, a Group Nature Programme was established, including
senior governance, which supports HSBC Continental Europe in
enhancing its capabilities, methodologies and tools, in line with
evolving regulatory and reporting expectations. HSBC Continental
Europe has identified two material nature-related impacts through its
DMA, which are connected to its wholesale lending activities. The
assessment did not identify any material negative impacts relating to
land degradation, desertification, and soil sealing. Financial risks
linked to nature-related issues have not been identified as material
following the conclusion of the internal nature scenario analysis
conducted in 2025, focused on the wholesale lending portfolio.

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Sustainability Statement

Financial risks associated with water consumption and withdrawal
and the impact and dependency on ecosystem services, particularly
within the Agriculture, Power & Utilities, and Food, Beverage &
Tobacco sectors, have been identified as emerging areas of focus
under medium and long-term time horizons, and require further
assessment over time. Ongoing work is focused on improving data
availability, such as asset location information and developing more
robust modelling methodologies. These improvements will enable
further enhancements to risk assessments in the medium and long
term.
HSBC Continental Europe still considers itself at an early stage of
understanding and taking actions to address its nature-related
impacts. At present, the concept of nature is approached as a broad
thematic area, and further work is required to develop a more
detailed understanding and implement targeted actions. As a key
next step, HSBC Continental Europe will start integrating location
data and doing sector deep dives to explore in detail the impacts on
its portfolio from a nature impact and risk perspectives and expect
the model and capabilities to evolve over time.
Recognising that climate change is one of the drivers of biodiversity
loss, see 'Addressing climate-related impacts, risks and opportunities
through policies and actions', page 69 for the actions the Bank is
taking to manage its climate-related IROs.
Biodiversity and ecosystems-related impacts, risks and opportunities

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Negative Impact | Impact on biodiversity driven by climate change By virtue of its financing activities, the Bank has exposure to sectors that negatively contribute to climate change. The effects of climate change, such as rising temperatures, increased frequency of extreme weather events, and changes in precipitation patterns may contribute to habitat destruction, wildlife decline and species extinction resulting in biodiversity loss. | Long-Term* | Downstream
Negative Impact | Impact on ecosystem services Through its financing activities, the Bank has exposure to sectors such as power utilities, food, beverage and tobacco, industrials, metal, mining and construction & building materials recognised as potentially creating negative impacts on ecosystem services including the state and health of species and pollution. | Long-Term* | Downstream

*Time horizons will be updated as the Bank develops its a pproach to nature and with the enhancement of data availability and quality.
HSBC Continental Europe used a range of Risk Management
Frameworks and tools, alongside internal and third-party data sets, to
identify and assess the nature-related IROs within its value chain. As
with climate, the approach varied across the different areas of its
business.
The impact and dependency that an organisation has on nature is
highly location-dependent, and accurately determining the scale
requires granular, site-specific data which is not currently available for
the Bank’s value chain. Due to these nature-related data coverage
and quality gaps, a high degree of estimation has been required to
carry out the DMA for nature. As a result, consultations with local
communities in its value chain were not feasible. HSBC Continental
Europe expects that its analysis of nature-related IROs will evolve as
data availability and quality, methodologies and industry practice
improve over tim e.
Assessment of materiality through HSBC
Continental Europe’s value chain
HSBC Continental Europe’s Downstream Value Chain
Corporate and Institutional Banking
As a financial institution, HSBC Continental Europe’s primary impact
on nature may arise from its downstream financing activities,
specifically wholesale financing. Through the capital provided to its
clients HSBC Continental Europe may indirectly impact a number of
aspects of the natural world. Visibility to the impacts associated with
these financing activities is limited, with many clients not yet able to
assess and disclose their own impacts and dependencies on nature
as a result of the lack of transparency and data availability in their own
supply chains, and many still overcoming the complexities of
understanding the downstream effects of their products and
services. This is expected to improve as more companies disclose
their nature-related impacts and dependencies in line with new
reporting requirements.
As a proxy for granular, location-specific client data, HSBC
Continental Europe assessed its CIB portfolio considering the sectors
in which clients operate and the country in which they are primarily
based.
To determine sector-level impact materiality, HSBC Continental
Europe used the ENCORE tool, developed by the Natural Capital
Finance Alliance in partnership with the United Nations ('UN'). The
ENCORE tool provides a view of the nature-related impacts across
different sub-sectors applying pressure and dependency scores in
each case, based on how the sectors interact with natural resources
and ecosystems.
In 2025, the Bank enhanced its assessment methodology by
increasing the coverage of nature impacts across clients' value chains
and refining ENCORE risk driver mapping to assess its negative
impacts and risks. For the sectoral assessment, HSBC Continental
Europe leveraged the impact materiality ratings of production
activities on ecosystem services and natural capital assets provided
by ENCORE. The sectoral impact assessment was reviewed by
considering the country-based geo-spatial data on nature impact and
the results of TEQ answers to arrive at the final impact materiality.
Nature-related risk associated with the wholesale lending portfolio
was assessed over the short, medium and long-term using a
combination of quantitative and qualitative approaches. This included
using the results from the ENCORE assessment along with the

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Sustainability Statement

output from the nature-related risk management approach. See
‘Testing the resilience of the strategy and business model in relation
to nature risk’ on page 56 and for the results of a nature scenario
analysis, see ‘Outcome of nature risk scenario analysis’ on page 56.
Nature-related opportunities for wholesale banking were assessed by
looking at the pipeline of wholesale lending opportunities over the
next 12 months and using the Risk Prioritisation Matrix approach to
assess the materiality of nature-related financing opportunities.
Traded and Market Risk
As part of supporting Markets and Securities Services customers
with their sustainability and transition needs focused on nature, the
measurement of risk sensitivities for FX, Interest Rates, Credit
Spreads, and Equity was introduced in 2024, in addition to climate.
The assessment of nature-related impacts and dependencies across
traded and market risk activities was carried out over the short,
medium and long-term using the ENCORE tool and a qualitative risk
assessment. This was complemented by an internal nature scenario
analysis used for all trading books, which was designed on the basis
that human activity draws down natural capital assets at an
unsustainable rate.
Liquidity Risk
H SBC Continental Europe undertook an assessment to understand
the impact that nature risk may have on its liquidity position. This
assessment was made up of two components:
– Qualitative assessment: to understand the potential impact that a
nature risk event may have for each liquidity risk driver, over a short-
term horizon.
– Quantitative assessment: to assess the impact on the main liquidity
risk drivers (deposits outflow and committed facilities drawdown)
under a nature risk scenario.
International Wealth and Premier Banking
The process for assessing the material impacts and dependencies on
nature from private banking, HSBC Asset Management and INKA
was the same as the process described in the Climate Change
section for IWPB under 'Assessment of the materiality through HSBC
Continental Europe's value chain' section on page 67.
HSBC Continental Europe's Own operations
Nature-related IROs from HSBC Continental Europe’s own operations
may arise from business activities at its office locations. HSBC
Continental Europe conducted a screening of its office locations to
identify potential impacts related to water, biodiversity, and waste.
This involved an assessment of the proximity of each of HSBC
Continental Europe’s sites to key biodiversity areas, world heritage
sites, and areas of water stress. The Bank has not directly assessed
the potential impact on threatened species, land degradation,
desertification, and soil sealing from its own operations; however, it
has used proximity to key biodiversity areas as a proxy for this.
The assessment concluded that none of HSBC Continental Europe’s
sites has a material negative impact on nature or contributes to the
deterioration of natural habitats. This is due to the nature of its
business activities at these locations, i.e. commercial offices with
relatively low water usage and limited contribution to local pollution
levels. As such, it has not been necessary to implement biodiversity
mitigation measures.
A financial materiality assessment related to its own operation was
conducted using a qualitative assessment across broad
environmental scenarios covering climate and nature. Through this
assessment, it has been concluded that the financial risk from nature
hazards in HSBC Continental Europe’s own operations is relatively
low.
Other nature-related risks, such as dependency on biodiversity and
ecosystem services (other than water availability) were not assessed.
This was due to a lack of available data, proxies, and methodologies.
HSBC Continental Europe's supply chain
The Bank undertook a materiality assessment of biodiversity and
nature risks to better understand the nature-related impacts in its
global supply chain. As part of the HSBC Group's nature strategy with
its suppliers, the Bank has begun developing sustainable sourcing
roadmaps across key sectors, such as support service, IT service and
Corporate real estate, following its materiality assessment of
biodiversity and nature risks. The roadmaps will help to address high-
risk areas and include considerations for nature and biodiversity
within HSBC Continental Europe procurement activities.
Addressing Biodiversity and Ecosystems-
related impacts through policies, actions and
targets
Policies
HSBC Continental Europe applies the HSBC Group’s sustainability
risk policies to its relevant financing activities. A new s ustainability
risk policies framework has been developed in 2025 to provide an
overview of how the HSBC Group identifies, evaluates and manages
risks related to the delivery of its sustainability approach, and is
engaged in strategic partnerships. These policies focus on mitigating
reputational, credit, legal and other risks and impose restrictions on
certain financing activities that may have material negative impacts
on nature. The HSBC Group's forestry and agricultural commodity
policies focus specifically on the upstream impacts of key agricultural
commodities including palm oil, timber, soy and cattle.
The HSBC Group also requires palm oil customers to obtain
certification under the Roundtable on Sustainable Palm Oil. The HSBC
Group’s sustainability risk policies framework also imposes certain
restrictions, for example on financing activities in environmentally and
socially critical areas which are defined as the Amazon Biome,
Antarctic, Arctic, Ramsar Wetlands and UNESCO World Heritage
Sites.
u Please refer the link to read the sustainability risk policies framework:
https://www.hsbc.com/who-we-are/esg-and-responsible-business/
managing-risk/sustainability-risk
Given the interconnectedness between Climate and Nature, the
HSBC Group’s thermal coal phase-out policy and the energy policy,
are also important mechanisms for helping to manage climate-related
risks. For further details of the Bank’s climate-related policies and
actions, see 'Addressing climate-related impacts, risks and
opportunities through policies and actions', page 69.
In addition to the sustainability risk policies, HSBC Continental Europe
has developed guidance for the management of nature-related risks
across its CIB lending activities. This includes guidance for
considering how nature-related physical and transition risks may
impact the credit risk management process and a monitoring process
to help detect and manage pockets of risks resulting from nature-
related impacts and dependencies.
HSBC Continental Europe recognises that further policy development
may be necessary to directly address its potential nature-related
impacts, as identified through the DMA process.

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Sustainability Statement

Actions
Developing an approach to nature
The HSBC Group's emerging approach to nature focuses on
considering how it develops its understanding of its exposure, its
approach to risk management and identifying opportunities to support
customers, as well as how to build the skills and data capacities that
are needed.
In 2025, the HSBC Group established a Nature Programme to
oversee the development of its approach to nature. The Nature
Programme brings together expertise from Group Sustainability,
Group Risk, the global business lines, Group Finance, the HSBC
Continental Europe Sustainability, Business and Risk teams, and
others to collaborate and take strategic decisions relating to nature.
The programme is focused on taking a coordinated and coherent
approach across the HSBC Group to address nature-related regulatory
requirements, progress the commercialisation of nature-related
opportunities, and explore how to embed nature alongside climate.
Managing the impact of the Bank's own
operations
HSBC Continental Europe supports the HSBC Group's ambition to
minimise the impact on nature from its own operations and supply
chain, and seeks to ensure that, where possible, its premises do not
adversely affect the environment or natural resources through its
sourcing practice. The HSBC Group has been working to embed
effective nature strategy through developing sustainable sourcing
roadmaps across key sectors, such as support services, IT services
and corporate real estate, following a materiality assessment of
biodiversity and nature risks. The roadmaps will help the Bank
address high-risk areas and include considerations for nature and
biodiversity within the HSBC Group's procurement activities.
Managing nature-related risks
HSBC Continental Europe has not identified any material nature-
related financial risks through its DMA process. However, given the
interconnectedness between nature and climate change, the risk
posed by nature degradation to the global economy and the
remaining potential for nature loss to pose risks to HSBC Continental
Europe, it has developed a nature-related risks management
approach and nature scenario analysis capabilities. The nature-related
risks approach aims to effectively identify and manage nature-related
risks that may impact the Bank’s operations, financial performance
and reputation. The approach sets out high level principles and
guidance for how nature-related risks should be managed through the
existing HSBC risk taxonomy and in line with the ‘three lines of
defence’ responsibilities described in the HSBC Group's Risk
Management Framework.
The identification and assessment of nature-related risks impacts
across the risk taxonomy and activities is part of the annual review of
the environmental risk (including climate and nature risks) materiality
assessment. The risk management approach has continued to evolve
in 2025 and is expected to improve with the growing availability of
data from sustainability disclosures.
CIB client engagement
Many HSBC Continental Europe's customers are working to
decarbonise their operations, transition to low-carbon business
models, strengthen resilience to physical climate impacts, and
address nature-related impacts and risks. To understand the impact
and dependencies on nature risk on the customer’s operations and
how this may potentially impact it financial and credit profile, the TEQ
considers nature factors including biodiversity in addition to climate
factors. This support engagement on net zero transition and nature-
related matters with key corporate customers. For more information
on the TEQ refer Corporate and Institutional Banking under
'Supporting customers' transition in high emitting sectors' on the
page 69.
Partnering for systemic change
Collective action across the private and public sectors and civil
society is key to enable the systemic change required to protect and
restore nature. HSBC Continental Europe has been involved in a
number of partnerships which focus on scaling nature-based
solutions. These partnerships, funded through its own philanthropic
spending, help drive action and develop industry practice across the
public and private sector.
In 2025, HSBC Continental Europe partnered with ONF - Agir pour la
Forêt fund, on multiple biodiversity conservation programmes aiming
to raise awareness on Nature-Based Solutions among the Bank’s
employees through volunteering outdoor fieldwork. The Bank also
supported research programs on monitoring climate change and the
resilience of forests to thrive in warmer and drier climates.
Nature-related training
HSBC Continental Europe continues to build understanding and
awareness of nature-related issues across its business and deployed
training to support the implementation of the nature-related risks
management across the bank. Specific environmental risk training
(covering Climate and Nature) have also been provided for
relationship managers within CIB and credit advisory functions to
increase nature risk culture, awareness and risk assessment as part
of the credit assessment journey. Training was delivered through
online modules, workshops, leadership development and sharing on-
the-ground experience from deals and customer interactions. HSBC
Continental Europe's Board members also received nature-related
upskilling as part of their mandatory training curriculum. In 2025,
Board, OpCo members and employees involved in the management
of ESG risks have participated in a specific awareness session on
wate r.
Targets
At present, HSBC Continental Europe does not have entity-level
nature-related targets. This is due to the nascent nature of this topic
for the Bank and the limitations in the quality and availability of
nature-related data. The Bank expects to continue to evolve its
impacts and risks assessment process as data improves and will
consider how to set nature-related targets once it has sufficient
confidence in the outputs of the analysis. HSBC Continental Europe
has however implemented Risk Indicators to support the monitoring
of any risk associated to the nature.

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Sustainability Statement

EU Taxonomy economic performance indicators 1
Environmental objectives
The EU Taxonomy Regulation establishes a classification system for
environmentally sustainable economic activities and requires financial
undertakings to disclose information on the extent to which their
activities are taxonomy-eligible and taxonomy-aligned.
These disclosures have been prepared in accordance with Article 8 of
the Taxonomy Regulation (EU) 2020/852 (‘EU Taxonomy
Regulation’)2,3,5 and related Commission Delegated Regulations,
including the Taxonomy Disclosure Delegated Act and its subsequent
amendments. This includes the amendments introduced by the 2025
Omnibus Delegated Act, effective from 1 January 2026.
The key changes introduced by the Omnibus Delegated Act include
the introduction of materiality thresholds and clarifications on the
treatment of not-assessed exposures, an updated scope for
taxonomy-related key performance indicators, and revisions to the
reporting templates, including the removal of separate templates for
fossil gas and nuclear activities. The amendments also refine the
presentation and calculation of KPIs, including their interaction with
the availability of counterparty sustainability information under the
CSRD 4.
The disclosures presented explain how the Bank’s economic
activities have been assessed against the EU Taxonomy technical
screening criteria and how the results of the assessment are
reflected through the key performance indicators (‘KPIs’) disclosed.
From 1 January 2026, financial undertakings are required to disclose
taxonomy-alignment KPIs covering the economic activities set out in
the Environmental Delegated Act 3. In adopting the amended
reporting framework, the Bank has extended its assessment to
include the four non-climate environmental objectives, in addition to
the climate objectives, for the 2025 financial year, based on the
applicable technical screening criteria and data availability.
Scope of consolidation
The Taxonomy KPIs presented in the tables are based on exposures
and balances within HSBC Continental Europe’s prudential scope of
consolidation as at 31 December 2025. Subsidiaries engaged in
insurance activities are treated as investment in subsidiary, and the
insurance activities are excluded from the prudential scope of
consolidation.
KPI: Green Asset Ratio ('GAR')
The GAR represents the proportion of the Bank’s covered assets that
are aligned with the EU Taxonomy. It is calculated as the percentage
of taxonomy-aligned assets relative to total covered assets, in
accordance with the EU Taxonomy disclosure requirements
applicable to financial undertakings.
In line with the revised rules, exposures to non-CSRD counterparties 6
are excluded from both the numerator and denominator of the GAR.
However, under the amended reporting framework introduced by the
Omnibus Delegated Act, the Bank may voluntarily include exposures
to non-CSRD counterparties 6 where those counterparties voluntarily
report EU Taxonomy KPIs or where there is a known use of proceeds
that enables an assessment of taxonomy eligibility and alignment.
Where included on this basis, such exposures are reflected
consistently in both the denominator and, where aligned, the
numerator of the GAR.
The denominator of the GAR (total covered assets) comprises on-
balance sheet exposures that fall within the scope of the EU
taxonomy framework and are therefore eligible to be assessed for
taxonomy alignment. This includes loans and advances, debt
securities and equity instruments not held for trading, as well as
repossessed collateral.
The numerator of the GAR includes those covered assets that finance
or are associated with EU Taxonomy-aligned economic activities
based on the applicable technical screening criteria.
Assets that cannot be assessed for taxonomy eligibility or alignment
are also excluded from the GAR calculation. These include, among
others, derivatives, financial assets held for trading, on-demand
interbank loans, cash and cash equivalents, on-demand loans, and
other asset categories such as goodwill and commodities.
Local government financing is included where the use of proceeds is
known and can be assessed against the EU Taxonomy criteria.
Exposures to local governments with unknown use of proceeds,
including general-purpose lending, are classified as ‘Other assets’ and
excluded from the GAR calculation.
Retail exposures are excluded from the EU Taxonomy framework,
except for residential mortgage lending and credit consumption loans
for motor vehicles. All other retail exposures are classified as ‘Other
assets’ and excluded from the GAR calculation.
The calculation of taxonomy-related KPIs for off-balance-sheet
exposures includes financial guarantees granted by the Bank and
assets under management, where applicable. Consistent with the
treatment of on-balance-sheet exposures, exposures to non-CSRD
counterparties 6 are excluded from both the numerator and
denominator of the relevant off-balance-sheet KPIs. Other off-
balance-sheet exposures, such as commitments, are excluded from
the calculation in accordance with the regulatory requirements.
Taxonomy-eligible and aligned
economic activities
Taxonomy eligibility and alignment are assessed based on
information made available by counterparties and, where relevant,
information on the specific use of proceeds of the underlying
exposures.
For exposures with a known use of proceeds, including green lending
and green bonds, eligibility and alignment are assessed with
reference to the financed economic activities. Exposure to green
bonds and other debt securities issued by non-CSRD counterparties 6
may also be assessed on this basis where sufficient information is
available. Green bonds issued by central governments, central banks
and supranational issuers are excluded from the scope of the GAR.
For general lending exposures, eligibility and alignment are assessed
using the turnover and capital expenditure (‘CapEx’) eligibility and
alignment ratios published in the most recently available sustainability
reports of counterparties within the scope of applicable reporting
requirements.
Exposures to multi-lateral development banks are classified as
exposures to credit institutions in accordance with EU Taxonomy
regulation and are assessed for eligibility and alignment on that basis.

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Sustainability Statement

Retail loans collateralised by residential immovable property, building
renovation loans, and motor vehicle loans are assessed for eligibility
and alignment based on the use of proceeds.
Taxonomy non-eligible economic
activities
Taxonomy non-eligible economic activities are activities that do not
fall within the scope of the EU Taxonomy and, as a result, cannot be
assessed to determine whether they qualify as environmentally
sustainable.
Assets not covered for GAR
calculation
Assets that are out of scope of the EU Taxonomy framework are not
included in the GAR and are therefore not reflected in numerator and
denominator.
Central governments, supranational issuers
and central banks
Exposures to central governments, supranational issuers and central
banks, including cash held and other banking exposures to central
banks, are out of scope for the GAR calculation.
Trading book
The trading portfolio, including trading derivatives, is out of scope for
the GAR calculation.
Derivatives
Derivatives in the banking book are out of scope for the GAR
calculation.
On demand interbank loans
On demand interbank loans to other credit institutions are out of
scope for the GAR calculation.
Cash and cash-related assets
Cash and cash-related assets are out of scope for the GAR
calculation.
Other assets
Other assets including retail exposures not covered by the EU
Taxonomy framework and intangible assets, are out of scope for the
GAR calculation as these cannot be assessed for taxonomy eligibility
or alignment.
Exposures to non-CSRD counterparties 6
Exposures to non-CSRD counterparties 6 are excluded from the GAR
calculation, except where voluntarily included in accordance with the
GAR methodology described above.
Non-assessed exposures
Under the amended EU Taxonomy rules, exposures may be reported
as non-assessed where taxonomy eligibility and alignment have not
been assessed, including where underlying economic activities are
treated as non-material under the quantitative materiality threshold
introduced by the Omnibus amendments.
As this is the first year of reporting under the amended framework,
counterparty sustainability information available at the time of
reporting did not enable the Bank to distinguish exposures that would
be presented as non-assessed. In addition, non-material portions of
the banking book are not identified separately for taxonomy reporting
purposes. Accordingly, the non-assessed columns have not been
populated for the 2025 financial year.
Reporting as a group
Since December 2024, HSBC Continental Europe was no longer
regarded as a financial conglomerate, therefore not subject to any
supplementary supervision. Consequently, disclosure of KPIs by
business segment or a weighted average KPI has not been disclosed.
Therefore, the reporting by HSBC Continental Europe is prepared
based on its principal business activity as a credit institution.
HSBC Continental Europe's GAR
HSBC Continental Europe is in the early stages of integrating EU
Taxonomy considerations into its broader climate strategy. HSBC
Continental Europe is beginning to track and report green project
finance lending, including assessing alignment against the EU
Taxonomy.
HSBC Continental Europe aims to support customers who are at
differing stages in their transition journey, focusing first on the
sectors and customers with the highest emissions and transition
risks, and evolving and expanding efforts over time; for example,
supporting clients in high emissive sectors to reduce their GHG
emissions. Consequently, not all sustainable finance provided by the
Bank, and in particular transition finance, will meet the strict criteria
for EU Taxonomy alignment.
The composition of the HSBC Continental Europe’s banking book is a
key driver of the GAR. With CSRD counterparties 6 only making up a
fraction of the overall book, most exposures are outside the scope of
eligibility assessment under the EU Taxonomy framework.
Furthermore, for those exposures where the use of proceeds is
known to be applied to eligible activities, such as green bonds and
property-related lending, data limitations result in limited ability to
comprehensively assess against the alignment criteria.
As data capabilities and market data availability improves, it is
expected that reporting and strategy will evolve.
u For further information on HSBC Continental Europe’s ESG strategy, please
refer to ‘Strategy, business model and value creation’ on page 46.
Data limitations
HSBC Continental Europe is dependent on several data sources to
determine exposures subject to CSRD 4,6 and calculate Taxonomy
ratios. Availability of data and improvements in data quality over time,
as firms adopt the Taxonomy requirements for their own disclosures,
could lead to differences in the data reported in future years as
compared to the current year.
The Bank will continue to engage with market data providers and
standard setters to improve the quality and completeness of
Taxonomy data as the Bank develops its capabilities to assess the
Taxonomy alignment of its portfolios.
Eligibility and alignment by environmental
objective
The taxonomy eligibility split by objective reported by non-financial
counterparties is used by HSBC Continental Europe in its assessment
and reporting for the year ended 31 December 2025.
For the Bank’s financial counterparties, the eligibility split by
environmental objective is based on counterparty reported data
where relevant counterparty information is available.
Where the split by environmental objective is not available, eligibility
and alignment reported by the counterparty is defaulted to CCM,
except in the case of insurers where it is defaulted to CCA.

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C ounterparty eligibility and alignment data
HSBC Continental Europe is highly reliant on published counterparty
eligibility and alignment ratios to assess eligibility and alignment of
exposures. The Bank places reliance on third party data vendors to
collect the eligibility and alignment data used in KPI calculations. A
number of checks and controls are operated to validate any data used
and this has identified that counterparty data quality and consistency
is variable. Controls in place include checking for template
mathematical accuracy, checking for incomplete data, and checking
for consistency of calculations across counterparties.
To consistently report the Bank's Taxonomy eligibility and alignment
of exposures there is a dependency on counterparty KPIs. However,
some counterparties calculate ratios using a different calculation
methodology and, in these cases, where sufficient information is
available to do so, the data is normalised so that data between
counterparties is comparable and can be used consistently across
calculations. For example, data is corrected in the case of double
counting and reported under one objective only. Total alignment is
calculated as a sum of alignment by objective, as opposed to total
alignment reported, to ensure that the data sums correctly. Where a
counterparty has not reported eligibility data and solely reported
alignment, it has been assumed that eligibility matches the alignment
KPIs.
HSBC Continental Europe has a dependency on counterparty
information to make an assessment for EU Taxonomy eligibility and
alignment. Where this information is incomplete and deemed not
reliable, it has been excluded from the numerator of the Bank’s GAR
calculation.
KPIs of financial counterparties
In accordance with the requirements under the EU Taxonomy,
insurance undertakings, investment firms and financial
conglomerates are required to disclose weighted average KPIs which
should be used by the Bank in assessing the eligibility and alignment
of exposures to relevant counterparties.
Where the disclosure of weighted average KPIs by financial
counterparties was not available or where more than one set of KPIs
has been reported, the approach set out below was followed. In
addition, the sector classification is reported in accordance with
FINREP 7 reporting.
– Financial conglomerates: Green Asset Ratios or if not available, non-
life underwriting KPIs, or if not available Green Investment KPIs.
– Credit institutions: Green Asset Ratios or if not available Green
Investment KPIs.
– Insurance undertakings: non-life underwriting KPIs or if not available
Green Investment KPIs.
– Investment companies: Green Asset Ratios – dealing on own
account.
– Asset managers: Green Investment Ratios.
Where weighted average KPIs were disclosed by counterparties, they
were not sufficiently granular for the Bank to satisfy its disclosure
requirements. For example, only alignment may be reported with no
split by objective. In these cases, the weighted average KPIs are
used but the same assumptions are applied as for other cases of
missing counterparty data as described above.
Exposures subject to the CSRD 4,6
Due to data limitations, it has not been possible to assess all the
criteria required to determine the CSRD 6 status. Instead, reliance has
been placed upon data provided by third party vendors. To treat a
counterparty as CSRD 6, the counterparty must be assessed as being
incorporated in the European Union or European Economic Area, and
have reported EU Taxonomy eligibility data. Where the data vendor
can only provide estimated data, the counterparty is treated as non-
CSRD 6.
Where counterparty-level EU Taxonomy KPIs are not available, parent
company Taxonomy KPI ratios are used to assess taxonomy eligibility
and alignment for both CSRD 6 and non-CSRD 6 exposures, where
relevant. Where parent company Taxonomy KPIs are disclosed on a
mandatory basis, these ratios are used to inform the calculation of
exposures to financial and non-financial counterparties reported in
rows 3–10 of the GAR template and for the calculation of the off
balance sheet KPIs. Where parent company Taxonomy KPIs are
disclosed on a voluntary basis, exposures assessed using those ratios
are reported separately as voluntary exposures in row 19 of the GAR
template.
Parent company Taxonomy KPIs may not be fully representative of
subsidiary-level activities. However, due to operational constraints,
subsidiary-level Taxonomy KPIs disclosed only in contextual or
narrative sections of parent company reports are not used for the
purposes of the GAR calculation.
Household exposures
Loans to households collateralised by residential immovable property
and loans to households for building renovations are assessed as
taxonomy-eligible under the Climate Change Mitigation objective in
accordance with activities 7.1 to 7.7 of the Climate Delegated Act.
Loans to households for the purchase of motor vehicles, where
granted after 1 January 2022, are assessed as taxonomy-eligible
under the Climate Change Mitigation objective in accordance with
activity 6.5 of the Climate Delegated Act.
However, insufficient data is currently available to enable a full
assessment of these household exposures for taxonomy alignment
against the applicable technical screening criteria, in particular, the do
no significant harm criteria. As a result, these exposures are reported
as taxonomy-eligible but not taxonomy-aligned.
The summary of KPIs (Template 0) is provided in the following table.
All other EU Taxonomy templates are provided in the appendices.
1 Taxonomy Regulation (EU) 2020/852.
2 Commission Delegated Regulation (EU) 2021/2178 supplementing
Taxonomy Regulation.
3 Commission Delegated Regulation (EU) 2023/2486 supplementing
Taxonomy Regulation and amending Disclosures Delegated Act.
4 The CSRD amends the Non-Financial Reporting Directive (NFRD) 2014/95/
EU and the Accounting Directive 2013/34/EU.
5 Commission Delegated Regulation (EU) 2026/73 amending Delegated
Regulation (EU) 2021/2178.
6 For the purposes of these disclosures, references to CSRD counterparties
and non-CSRD counterparties reflect whether counterparties are subject to
sustainability reporting requirements under the CSRD for the reporting
period. This takes into account the phased implementation of CSRD and the
availability of sustainability reporting information, including data reported
under the Non-Financial Reporting Directive ('NFRD') in the initial phase of
CSRD application.
7 FINREP (Financial Reporting) is a standardised supervisory reporting system
for financial information established by the European Banking Authority
('EBA') via Commission Implementing Regulation (EU) 680/2014.

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Summary of KPIs (Template 0)
This table sets out a summary of KPIs required to be disclosed by
HSBC Continental Europe as a credit institution, under Article 8 of the
Taxonomy regulation. The templates are prepared in accordance with
Annex VI of Commission Delegated Regulation (EU) 2026/73, which
amends the Taxonomy Disclosures Delegated Act.
As the requirements to disclose the Trading book KPI and Fees and
Commissions KPI have been deferred until 2028, the corresponding
rows are not included in the Summary of KPIs.
A comparative Summary of KPIs (Template 0) has been presented for
the 2024 financial year based on the disclosure requirements
applicable prior to the amendments introduced by the Omnibus
Delegated Act. As explained in the basis of preparation above, the
revised framework introduced changes to the scope, calculation
methodology and presentation of KPIs. As a result, the 2024 KPIs
prepared under the previous rules are not directly comparable to the
2025 KPIs reported under the amended requirements.
To facilitate year-on-year comparison, an additional pro-forma
Summary of KPIs (Template 0) has been presented, showing 2024
KPIs recalculated under the revised reporting framework. These pro-
forma KPIs are based on 2024 underlying data and exclude the use of
parent company ratios and voluntary disclosures.

Template 0: Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
|  | 31 Dec 2025
| Total exposure to Taxonomy- aligned activities (currency) | KPI % | KPI % | % coverage (over total assets) (%) | non assessed exposures (% of covered assets) (%) | non assessed exposures (% of covered assets) (%)
Turnover-based | CapEx-based | Turnover- based | CapEx-based |  | Turnover- based | CapEx-based
Main KPI | Green asset ratio (GAR) stock | 728 | 998 | 3.84 | 5.27 | 7.54 |  |
| Total exposure to Taxonomy- aligned activities (currency) | KPI % | KPI % | % coverage (over total assets) (%) | non assessed exposures (% of covered assets) (%) | non assessed exposures (% of covered assets) (%)
Turnover-based | CapEx-based | Turnover- based | CapEx-based |  | Turnover- based | CapEx-based
Additional KPIs | GAR (flow) | 352 | 351 | 3.96 | 3.95 | 16.30 |  |
| Financial guarantees | 97 | 106 | 28.16 | 30.85 | NA |  |
| Assets under management 1 | 1,452 | 2,168 | 10.90 | 16.28 | NA |  |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale totalling EUR 48,407 million, of which
EUR 18,789 million were assessed as taxonomy-eligible and EUR 488 million as taxonomy-aligned based on counterparties’ Turnover KPIs. Based on
counterparties’ CapEx KPIs, EUR 21,356 million were assessed as taxonomy-eligible and EUR 7,503 million as taxonomy-aligned. If these held for sale
exposures had been included in the calculation, the AuM KPI would have been 3.14% based on Turnover and 15.67% based on CapEx.

Template 0: Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation - (as reported prior to amendments introduced by the Omnibus Delegated Act)
|  | 31 Dec 2024
Million EUR | Total environmentally sustainable assets (Based on Turnover) | KPI Based on Turnover KPI of the counterparty | Total environmental ly sustainable assets (Based on CapEx) | KPI Based on CapEx KPI of the counterparty | % coverage (over total assets) | % of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V) | % of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
Main KPI | Green asset ratio (GAR) stock | 440 | 0.40% | 790 | 0.72% | 45.28 | 36.85 | 54.72
| Total environmentally sustainable assets (Based on Turnover) | KPI Based on Turnover KPI of the counterparty | Total environmental ly sustainable assets (Based on CapEx) | KPI Based on CapEx KPI of the counterparty | % coverage (over total assets) | % of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V) | % of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
Additional KPIs | GAR (flow) | 14 | 0.03% | 40 | 0.10% | 18.58 | 65.49 | 15.94
| Financial guarantees | 33 | 1.71% | 36 | 1.83% |  |  |
| Assets under management | 3,378 | 1.05% | 5,130 | 1.59% |  |  |

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Template 0: Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation - Proforma KPIs based on the amended requirements of the Omnibus Delegated Act, where adopted
|  | 31 Dec 2024
| Total exposure to Taxonomy- aligned activities (currency) | KPI % | KPI % | % coverage (over total assets) (%) | non assessed exposures (% of covered assets) (%) | non assessed exposures (% of covered assets) (%)
Turnover-based | CapEx-based | Turnover-based | CapEx-based |  | Turnover-based | CapEx-based
Main KPI | Green asset ratio (GAR) stock | 440 | 790 | 2.15 | 3.86 | 8.44 |  |
| Total exposure to Taxonomy- aligned activities (currency) | KPI % | KPI % | % coverage (over total assets) (%) | non assessed exposures (% of covered assets) (%) | non assessed exposures (% of covered assets) (%)
Turnover-based | CapEx-based | Turnover-based | CapEx-based |  | Turnover-based | CapEx-based
Additional KPIs | GAR (flow) | 14 | 40 | 0.16 | 0.44 | 18.58 |  |
| Financial guarantees | 33 | 36 | 17.25 | 18.37 | NA |  |
| Assets under management | 3,378 | 5,130 | 8.62 | 13.10 | NA |  |

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Sustainability Statement

Social
HSBC Continental Europe is committed to operating a responsible,
socially focused business. This goes beyond meeting regulatory
requirements to focus on building strong relationships with its
workforce and customers based on trust.
HSBC Continental Europe promotes an inclusive, safe and rewarding
workplace where employees treat others with dignity and respect.
The HSBC Group and HSBC Continental Europe have adopted
policies and practices to safeguard the wellbeing of their workforce
and support them in achieving their personal and professional goals.
This approach goes hand in hand with resilience and allows the HSBC
Group to focus on delivering products, services and education that
support customers and communities.
HSBC Continental Europe has identified nine social-related IROs.
Adequate wages has been assessed as additional material positive
impact in 2025. In addition, negative impacts and risks related to data
privacy have been consolidated and reported as entity specific topics
as the Bank's approach to data privacy extends across its operations
and value chain, covering employees, customers, counterparty data
as well as data generated through digital banking channels and third-
party partnerships. The other IROs co nnected to inclusion, training
and skills development, social dialogue, secure employment, and
work-life balance remain consistent with the previous year outcomes.
HSBC Continental Europe’s material negative impacts are considered
industry wide challenges in the region HSBC Continental Europe
operates. The following sections address these material IROs in turn,
as well as how HSBC Continental Europe is acting to build inclusion
and resilience in its business.

S ocial impacts, risks and opportunitie s

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Own workforce
Positive Impact | Active social dialogue Through internal dialogue and engagement, facilitated by regular surveys and exchanges with management, HSBC Continental Europe ensures that employees' interests and concerns are effectively represented and incorporated into its strategy. This collaborative approach strengthens employee trust and wellbeing. | Short / Medium / Long Term | Own operations
Positive Impact | Building an inclusive workforce As part of its core values of embracing inclusion and collaborative success, the Bank fosters a culture that promotes equal opportunities for workforce. This approach aims at ultimately enhancing a sense of inclusion across the organisation. | Short / Medium / Long Term | Own operations
Positive Impact | Career growth and progression HSBC Continental Europe's high-quality training and skills development programmes have a positive impact on employees. These programmes boost employees confidence, enabling them to excel in their roles and advance in their careers. | Short / Medium / Long Term | Own operations
Opportunity | Productive and skilled workforce Strong training and skills development supports employee engagement and productivity, retention and recruitment, enhancing customer delivery and the Bank's competitive advantage. | Short / Medium / Long Term | Own operations
Negative Impact | Secure employment Ongoing business transformation may cause concerns about job security and increased stress for employees due to transfers and changes in the operating model of HSBC Continental Europe. | Short Term | Own operations
Positive Impact | Adequate wages HSBC as a group including HSBC Continental Europe ensures fair and sufficient wages that may lead to a positive social impact on the employees’ wellbeing and ensures that they are able to go beyond decent living conditions for themselves and their family. | Short / Medium / Long Term | Own operations
Negative Impact | Work-life balance HSBC Continental Europe belongs to an industry where certain businesses are culturally exposed to high workload, which may lead to extended working hours, resulting in insufficient rest, reduced morale, and a heightened risk of mental health issues among employees. | Short / Medium / Long Term | Own operations
Data Privacy (Entity Specific)
Negative Impact | Right to privacy Each person has a fundamental right to privacy, and any unauthorised access to personal information of bank’s employees’, clients and/or other data subjects could lead to serious consequences such as identity theft, financial losses and reputational damage. Similarly, the unauthorised disclosure of business data could affect the Bank's clients’. | Short / Medium / Long Term | Own operations Downstream
Risk | Compliance with data protection laws Improper handling of data and lack of robust security measures may lead to potential data breaches or breaches of regulations such as General Data Protection Regulation ('GDPR'). This may result in fines, penalties, reputational damage and loss of client trust which is crucial to the Bank's business model. | Short / Medium / Long Term | Own operations Downstream

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Sustainability Statement

HSBC Continental Europe’s workforce
HSBC Continental Europe relies on its workforce to meet its strategic
objectives and deliver its purpose of ‘Opening up a world of
opportunity’. HSBC Continental Europe's approach acknowledges
that its workforce is not only central to operational effectiveness, but
also a key determinant in achieving its strategic objectives and
sustaining its business model. HSBC Continental Europe aims to
create a workplace that will help attract, retain and motivate
employees so they can deliver for clients across countries and
territories.
In 2025, HSBC Continental Europe obtained a Top Employer
certification for HSBC Continental Europe as an entity and eight of its
markets (France, Ireland, Germany, Italy, Luxembourg, Netherlands,
Poland and Spain), delivered by the Top Employers Institute f or the
commitment and actions towards promoting an inclusive and
supportive company culture.
The HSBC Continental Europe People function facilitates talent
management, employee mobility, and defines frameworks to support
employee performance management, as well as learning and
development.
The People f unction also partners with businesses and functions to
establish minimum standards for employee relations, industrial
relations, payroll and personnel administration, people capabilities,
hiring, and inclusion. It consists of approximatively 207 workforce
members (2024: 210 workforce members) located primarily in the
Paris hub, alongside other employees distributed across all HSBC
Continental Europe countries.
Characteristics of HSBC Continental
Europe’s workforce
HSBC Continental Europe’s workforce comprise of a diverse group of
individuals who contribute to its operations. This includes both
permanent and temporary employees, as well as non-employees. The
non-employee population comprises contractors, consultants, and
both external and internal service providers. A detailed definition of
workforce sub-categories is available in the ‘Stakeholders in the value
chain’ section (see page 48). The Bank has applied phase-in
provisions for the non-employee population.

Breakdown of employees by gender, country and contract type
Metric | 2025 | 2024
Total number of employees by headcount | 6,826 | 7,562
By gender |  |
Male | 3,440 | 3,841
Female | 3,386 | 3,721
By country |  |
France | 2,806 | 3,245
Germany | 2,275 | 2,510
Malta | 955 | 947
Others | 790 | 860

By employment type and gender |  |
Permanent employees | 6,379 | 7,098
Male | 3,176 | 3,568
Female | 3,203 | 3,530
Temporary employees | 447 | 464
Male | 264 | 273
Female | 183 | 191
Rate of YTD voluntary turnover in the reporting period | 5.3% | 4.6%

HSBC Continental Europe applies the HSBC Group’s global standards
to define employee characteristics, while also considering country-
specific regulations for each entity. Employee metrics should be
interpreted in the following context:
– In 2025, 1,480 employees left HSBC Continental Europe (2024:
3,854), resulting in a turnover rate of 14.3 per cent (2024: 53 per
cent). These consistently high figures reflect ongoing organisational
transformation, including the sale and transfer of HSBC Epargne
Entreprise, the sale of HSBC Assurances Vie (France), outsourcing
of IT and infrastructure activities in France, and the sale of the
Private Banking business in Germany. During this period, voluntary
turnover provides a more accurate measure of employee-initiated
departures.
– Voluntary turnover is defined as the number of employees who left
voluntarily since the start of the year, as a percentage of the
average headcount for the year-to-date. The voluntary turnover rate
for 2025 is 5.3 per cent, an increase of 0.7 percentage points
compared to 2024.
– Employee numbers are based on active headcount as of 31
December 2025.
– In 2025, the workforce classification was refined, providing a
better distinction between employees and non-employees
compared to the 2024 definition. The current classification is now
more closely aligned with CSRD headcount requirements. This
adjustment provides a clearer view of HSBC Continental Europe’s
core employee population. The 2025 headcount figures exclude the
non-employees population, and this approach is also reflected in the
restated 2024 metrics.
– Countries with 50 or more employees, representing at least 10 per
cent of total employees, are disclosed separately.
– Employees who did not report their gender are included in the
‘Male’ category.
– The average number of employees for 2025 is available in
'Note 6 – Employee compensation and benefit' of the financial
statement.
Employee engagement
Employee engagement is central to building a healthy workplace at
HSBC Continental Europe. Therefore, employees are encouraged to
share their experiences both individually and collectively. For this
purpose, leadership and managers provide multiple channels for open
dialogue and feedback. The results are widely discussed, including at
the executive level, to inform decision-making. Policies are developed
based on employee feedback to support wellbeing and interests. The
HSBC Continental Europe Head of People is accountable for
employee engagement.
As part of the DMA process, HSBC Continental Europe considers
individuals who may be particularly affected by certain IROs. Most
notably, self-reported characteristics such as gender, age, or

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disabilities, where legally permitted, were taken into account. These
considerations are reflected in the assessment of impact severity,
based on available data.
HSBC Continental Europe uses tools such as the HSBC Group’s
Snapshot survey to assess employee sentiment, in addition to key
employee characteristics — including above-mentioned ones.
Employee Resource Groups ('ERGs'), sponsored by leadership, bring
together employees with shared interests and provide valuable
insights into employee needs and perspectives.
Direct engagement with employees
Snapshot survey
The annual ‘Snapshot’ survey is the primary tool for capturing
employee feedback. It enables HSBC Continental Europe to assess
engagement, perceptions of strategy, communication, customer
experience, culture, and working methods, and to track the
effectiveness of actions and initiatives. The survey is centrally
coordinated by the HSBC Group Employee Listening team. HSBC
Continental Europe tracks the effectiveness of employee
engagement through the Snapshot survey response rate, as well as
through the level of positive responses to questions related to
employees’ motivation.
In most of HSBC Continental Europe countries, despite the ongoing
transformation projects, the Snapshot participation rate remained
stable compared to the previous year, with a few exceptions. This
resulted in an average participation rate of 64 per cent in 2025 (2024:
70 per cent). I nsights from the survey are shared with and discussed
by the Operating Committee to define action plans and are provided
directly to managers, when there are more than 10 responses from
their teams.
The People function supports teams in discussing feedback through
interactive dashboards, action planning tools, and discussion guides.
Performance and reward survey
HSBC Continental Europe also conducts an annual performance and
reward survey, gathering feedback on the performance and pay
review cycle. This provides valuable insights into how well the
organisation meets employee expectations regarding compensation,
development, and professional growth.
Employee Resource Groups
The HSBC’s ERGs foster an inclusive culture and enhance the
employee experience. These groups operate across HSBC
Continental Europe, led by employees with shared values, identities,
interests, and goals. Most ERGs are sponsored by a member of the
leadership team, ensuring a direct connection between senior
leadership and employees. While governed by a global charter, ERGs
engage in region- and country-specific initiatives and events.
Additional engagement channels
Employee feedback is also collected through several ad hoc channels:
– The ‘Exchange’ programme: agenda-free meetings where
employees can discuss issues directly with senior leadership.
– The ‘Technologia’ survey: focused on health and quality of life at
work in France.
– Targeted listening activities: feedback sessions at key career
moments, such as onboarding.
Engagement and communication through
representative bodies
HSBC Continental Europe promotes active social dialogue with staff
representatives to ensure employees’ perspectives and concerns are
heard. Open communication with these bodies is considered
essential for strengthening employee wellbeing, as well as
supporting recruitment, retention, and overall satisfaction.

Being a responsible employer
HSBC Continental Europe is committed to responsible employment
practices, guided by the HSBC Group’s global policies and
procedures. These set out minimum control requirements for all
employees, ensuring effective and safe management. Policies are
aligned with HSBC Continental Europe’s purpose, consider employee
interests, and comply with local regulations and practices. Unless
otherwise specified, these policies are detailed in Global Functions
and Global Business Functional Instruction Manuals, accessible to all
employees via the intranet.
People Management Policy
The HSBC Group People Management Policy outlines the standards
managers must follow to support employees and foster an
environment where everyone can thrive. The policy covers inclusion,
learning, and development, and applies globally across all businesses
and functions. All employees and other worker groups are expected
to comply with and enforce this policy. Oversight of the policy
implementation within the HSBC Group is provided by the HSBC
Group Chief People and Governance Officer, with the HSBC
Continental Europe Head of People accountable for local
implementation. Managers are responsible for reinforcing HSBC’s
values, building an inclusive workforce, seeking employee feedback,
addressing areas for improvement and taking appropriate actions.
HSBC Human Rights Statement
HSBC Continental Europe adheres to the HSBC Group’s Human
Rights Statement, which describes the ways in which the HSBC
Group seeks to meet its responsibility to respect human rights. The
HSBC Group’s approach is guided by the United Nations Guiding
Principles on Business and Human Rights (‘UNGPs’) and the OECD
Guidelines for Multinational Enterprises on Responsible Business
Conduct. As per the HSBC Hu man Rights Statement, HSBC
Continental Europe requires all its employees to treat others with
dignity and respect. HSBC Continental Europe has zero tolerance for
harassment or u nlawful discriminatio n, including discrimination
connected to age, race, ethnicity or nationality, religion or faith, social
status, skin colour, mental or physical health conditions, disability,

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pregnancy, gender, gender expression, gender identity, sexual
orientation, marital status or other domestic circumstances,
employment status, and working hours or other flexible working
arrangements.
HSBC Continental Europe’s employees are made aware of their
employment rights through a variety of channels, including written
employment contracts and policies, and procedures in employee
handbooks and on employee websites. Employees of the Bank are
trained on a range of human rights-related topics, including but not
limited to inclusion, b ullying and harassment, and data privacy. In
addition, employees receive regular training as part of the HSBC
Group’s broader financial crime control framework, covering anti-
money laundering, anti-bribery and corruption, and financial sanctions
and export controls. Each of these intersects with human rights risk.
HSBC Continental Europe addresses human rights grievances and
provides suitable means for affected individuals or communities to
communicate concerns through its speak-up channels. The Bank
does not tolerate retaliation against anyone who raises concerns and
takes appropriate action in cases where employees act in violation of
the Human Rights Statement. See the ‘Whistleblowing and speak-up
culture’ section on page 95 for further details on speak-up channels.
HSBC Continental Europe is committed to ethical standards. The
Bank faces low risk of slavery, forced labour and child labour in its
operations, but has nonetheless established policies to prevent and
address these risks, in line with the HSBC Group's Human Rights
Risk approach. The HSBC Group Modern Slavery and Human
Trafficking report provides more details on these efforts, including on
tackling modern slavery and human trafficking.
Health and Safety Policy
HSBC Continental Europe is devoted to providing a safe and healthy
working environment for all its workforce abiding by the HSBC
Group's Health and Safety Policy, which is accessible on the HSBC
Group's website. H SBC Continental Europe deploys the policy in a
balance with local regulations and to meet legal requirements
wherever it operates and, where reasonably practical, exceeds them.
The HSBC Group's Health and Safety management system is
structured in accordance with the international standard for
occupational health and safety management systems - ISO 45001,
while also taking into account relevant local legislation. This approach
ensures that robust standards are maintained, providing confidence in
the safety of HSBC working environments. All employees,
contractors, consultants, and service providers operating across
Continental Europe are required to adhere to these safe working
practices, supporting the Bank's commitment to health and safety
excellence.
Health and safety performance is subject to ongoing monitoring and
assurance to ensure HSBC Continental Europe maintains compliance
with applicable laws and regulations. Everyone at HSBC Continental
Europe has a responsibility to help create a healthy and safe working
environment. Employees are expected to take ownership of their
safety and are encouraged and empowered to report any concerns.
The Chief Operating Officer and Head of Corporate Services have
overall responsibility for ensuring that the correct policies, procedures
and safeguards are put into practice.
Mental health
HSBC Continental Europe prioritises mental health, following the
HSBC Group's position statement on mental health for all employees.
Support services include mental health education, self-help
resources, employee networks, and access to assistance
programmes and medical plans.
The HSBC Continental Europe Head of People oversees workplace
mental health support. In 2025, wellbeing content in mandatory
training was updated, and a new voluntary mental health eLearning
module was introduced. For more information on trainings, see
'Business Conduct' section on page 94. HSBC Continental Europe’s
approach aligns with the World Health Organisation’s Healthy
Workplace Model and local best practices. Targeted policies on
workload and mental health are detailed in the ‘Promoting work-life
balance’ section on page 90.
Supplier Code of Conduct
HSBC Continental Europe strives to ensure that contractors,
consultants, and external service providers employed by third parties
act in accordance with the Bank’s culture and strategic priorities. This
is primarily managed through the Group-wide Supplier Code of
Conduct (‘the Code’), which sets out the HSBC Group's ambitions on
the environment, inclusion, provision of healthy and safe working
conditions, and human rights – including the prohibition of forced and
child labour. The Code outlines the minimum standards expected of
suppliers on these issues.
In 2025, the Code was refreshed to include principles on responsible
use of Artificial Intelligence ('AI'). Adherence to the Code is
formalised with clauses in supplier contracts which support the right
to audit and act if breach is discovered. The Bank's suppliers are
required to reiterate their adherence to this code at regular intervals
or at least when renewing the contract. Suppliers unable to approve
the Code are required to provide with an eligible alternative. At the
end of 2025, 98.4 per cent of HSBC Continental Europe's suppliers
have approved the Supplier Code of Conduct or provided an
alternative accepted by the Global Procurement function (2024: 97.8
per cent).
Fostering social dialogue
HSBC Continental Europe is committed to fostering social dialogue
across its organisation. HSBC Continental Europe ensures that
employee wellbeing, interests and concerns are well represented and
integrated into appropriate initiatives through active social dialogue
with staff representative bodies.
Employment Practices and Relations Policy
The HSBC Group Employment Practices and Relations ('EPR') Policy
defines minimum standards for regulatory compliance and
responsible workforce management practices. The policy sets out
requirements for HSBC Continental Europe and its workforce
regarding topics such as inclusion, minimum pay thresholds,
management of employee behaviour, freedom of association, in line
with local laws. It applies to all geographies, businesses, and
functions - implementing additional country-level policies providing for
market-specific arrangements where necessary.
Additionally, where changes in strategy or in its operations may give
rise to adverse impacts on employee wellbeing, HSBC Continental
Europe engages in appropriate consultation with employees and
representative bodies to find appropriate solutions.
The HSBC Group Chief People & Governance Officer oversees global
implementation, while the HSBC Continental Europe Head of People
and local Heads of People are responsible for regional and country-
level execution.

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Approach to social dialogue
HSBC Continental Europe is committed to continuing to engage in
constructive social dialogue to ensure employee wellbeing, interests,
and concerns are represented and integrated into organisational
initiatives. Engagement with staff representative bodies is a key part
of this commitment.
HSBC Continental Europe maintains a structured approach to social
dialogue, complying with local union and staff representation
requirements across its European offices. The Bank engages with
staff representatives in all countries of operation, holding meetings as
required by local regulations. These sessions provide clear
communication channels between employees and senior leadership,
ensuring employee perspectives are considered. The approach is
tailored to local practices; for example, in France, staff
representatives are elected from HSBC Continental Europe
employees, while in Germany, negotiations are conducted with
national banking industry representatives. These specific local rules
can lead to sector-level agreements applied by HSBC Continental
Europe but not accounted for in the collective bargaining reported
metrics.
European Works Council
HSBC Continental Europe has established a European Works Council
('EWC') to provide additional representation for employees,
complementing existing staff representative bodies. The EWC is
informed and consulted on significant transnational matters, such as
the Bank’s economic and financial situation within EEA Member
States. The EWC does not replace existing representative bodies or
interfere with established bargaining and consultation procedures.
Metrics
Metrics related to social dialogue are presented in the following table.
For a comprehensive understanding, these figures should be
considered alongside the 'Approach to social dialogue' section (see
page 87).
In 2025, 84 per cent of HSBC Continental Europe employees were
covered by local collective bargaining agreements (2024: 76 per cent),
and 88 per cent were represented by local staff representatives
(2024: 81 per cent)

Percentage of Total employees covered by collective bargaining agreements and staff representatives
Metric | 2025 (%) | 2024 (%)
Total employees covered by collective bargaining agreements |  |
By EEA country: France | 100 | 100
By EEA country: Germany | 71 | 44
By EEA country: Malta | 99 | 99
By EEA country: Others | 48 | 46
Total employees covered by staff representatives |  |
By EEA country: France | 100 | 100
By EEA country: Germany | 71 | 44
By EEA country: Malta | 99 | 99
By EEA country: Others | 84 | 91

Providing employees with a fair
compensation
The HSBC Group aims to offering a competitive compensation to
employees across all markets, forming a core part of its employee
value proposition. Remuneration packages are designed to provide
financial stability for employees and their families, covering essential
living needs and supporting overall wellbeing. The definition of fair
compensation reflects local factors such as living costs and
regulations — including Directive (EU) 2022/2041 on adequate
minimum wages — while upholding principles of fairness and decent
treatment. In addition, compensation packages are regularly
benchmarked against peers' practices to ensure market alignment.
The HSBC Group has been certified by the Fair Wage Network from
31 December 2024 to 31 December 2026. In partnership with the
Fair Wage Network, HSBC ensures that local living wage benchmarks
are met or exceeded in every country and territory where it operates.
In 2025, the Fair Wage Network confirmed that pay in all HSBC
Continental Europe countries meets or exceeds local living wage
standards.
Furthermore, the HSBC Group aims to enhance transparency, by
helping colleagues understand how pay decisions are made, and how
fixed and variable pay are defined.

Acting to ensure adequate wages
The remuneration framework is defined at HSBC Group level but
adapted locally to reflect market practices and regulations. HSBC
Continental Europe’s Remuneration Policy ensures fair compensation
for all employees, structured around three main components:
– Fixed pay: Reflects employee’s role, responsibilities, experience,
skills, and expertise.
– Variable pay: Rewards individual performance and contributions,
assessed annually, considering not only financial and commercial
performance but also compliance with HSBC's values and risk-
management standards.
– Benefits: Includes medical schemes, life insurance, retirement
plans, profit sharing, savings plans, time savings accounts, and
family leave options.
u For more information regarding the specific features of the HSBC
Continental Europe Remuneration Policy, see the section 'Company
remuneration policy' on page 38.
The HSBC Continental Europe’s Head of People is accountable for
policy implementation across HSBC Continental Europe.

Building an inclusive workforce
HSBC Continental Europe is determined to foster an equal
opportunity culture that promotes inclusion and prevents
discrimination. The People Management Policy (see page 86) sets
guidelines and expectations for managers to create a values-driven,
inclusive workplace, support strategic objectives, and address
employee feedback to improve performance and meet the needs of
HSBC Continental Europe stakeholders. Local implementation is
regularly reviewed and tailored to meet the needs of employees and

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Sustainability Statement

comply with jurisdictional requirements, while remaining consistent
with the HSBC Group standards.
Vulnerable Employees Policy
In line with Directive 2000/78/EC, HSBC Continental Europe ensures
equal treatment for employees with disabilities. The Vulnerable
Employees Policy provides guidance to maintain a safe and equitable
environment, including tailored risk assessments and personal
emergency evacuation plans for employees with disabilities or
medical conditions. The HSBC Group Chief Operating Officer
oversees the policy implementation.
Digital Accessibility Policy
All digital applications developed or updated by HSBC Continental
Europe must comply with the HSBC Group Accessibility Standards,
ensuring alignment with local disability, discrimination, and equality
regulations. This policy is overseen by the HSBC Group Head of
Digital Experience & Accessibility.
Training and Awareness
HSBC Continental Europe is committed to equipping its workforce by
raising awareness of unconscious bias and fostering an inclusive
workplace. Key training includes ‘The Code of Conduct & Me’ and the
People Manager Excellence Programme, which focus on inclusive
management, manager's role and expectations. Regular inclusion
workshops are also held to enhance mutual understanding, cultural
knowledge and support employees in navigating local nuances.
Employee-led initiatives
Across HSBC Continental Europe, eight Employee Resource Groups
play a vital role in fostering an inclusive culture. These groups focus
on priority areas such as sexual orientation, gender, support for
working parents, ethnicity, disability, and intergenerational inclusion,
tailoring their activities to local regulations. The impact of these
initiatives is tracked through the Snapshot Survey.
W e valu e difference
Reflecting its core value ‘We value difference’, the HSBC Group
places employee inclusion at the heart of its social strategy. To
reinforce inclusive behaviours, objectives related to inclusion are
embedded in members of the management body remuneration
scorecards. This approach is mirrored at HSBC Continental Europe
level, by integrating objectives pertaining to engagement and
inclusion rates in the Snapshot Survey into HSBC Continental Europe
Operating Committee members' and attendees' individual
remuneration scorecards.
Metrics
HSBC Continental Europe monitors the following metrics

Gender representation in senior leadership |  |
Metric | 2025 | 2024
Male (Number) | 408 | 451
Male (%) | 70.6 | 71.2
Female (Number) | 170 | 182
Female (%) | 29.4 | 28.8

HSBC Continental Europe has applied the HSBC Group’s global standards to summarise its gender representation metrics. The metrics should
be considered in the context of the following information: All the employees who have not declared their gender have been incorporated into
the ‘Male’ gender category. Senior leadership is considered GCB 3 and above in the Bank 'Global Career Band' structure.

Employees by age group |  |  |  |
| 2025 | 2024
Metric | Number | % | Number | %
By age distribution |  |  |  |
<=29 | 947 | 13.9 | 1,073 | 14.2
30-49 | 3,577 | 52.4 | 4,020 | 53.1
>=50 | 2,302 | 33.7 | 2,469 | 32.7

HSBC Continental Europe has applied the HSBC Group’s global standards to summarise its age distribution metrics. The metric includes
permanent and temporary employees. The 2024 updated figures indicate a change in the methodology for classifying the workforce. For further
details, see 'Characteristics of Workforce' section on page 84.
Gender pay gap and remuneration ratio
Based on the population covered under the annual pay review cycle
(a headcount of 6,616), the Bank has identified, on fixed pay, a 25.6
per cent gap on median (2024: 25 per cent) and a 29 per cent gap on
mean (2024: 29 per cent) and, on t otal Compensation, a 28 per cent
gap on median (2024: 27 per cent) and a 37 per cent gap on mean
(2024: 36 per cent). This is driven by the higher proportion of men in
senior roles (MD and GCB3) in Corporate and Institutional Banking,
Asset Management and Private Bank. There are also several senior,
head office roles held by a men.
6 The Global Career Band ('GCB') framework defines the Bank’s leadership structure. Senior leadership consists of colleagues at GCB3 and above, which includes
the Managing Directors ('MD'). Middle management is represented by GCB4, while junior management covers GCB5 and GCB6.

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Gender pay gap distribution 2025
HSBC Continental Europe | Fixed pay | Total compensation
Global Career Band 6 | Total | Male | Female | Mean | Median | Mean | Median
MD | 118 | 94 | 24 | 19% | 15% | 19% | 17%
3 | 491 | 342 | 149 | 9% | 9% | 16% | 14%
4 | 1,706 | 1,048 | 658 | 10% | 10% | 13% | 12%
5 | 2,031 | 1,055 | 976 | 9% | 10% | 8% | 11%
6 | 1,366 | 532 | 834 | 9% | 13% | 10% | 10%
7 | 722 | 180 | 542 | —% | 1% | —% | 2%
8 | 182 | 59 | 123 | (6)% | (5)% | (6)% | (6)%
Overall gap | 6,616 | 3,310 | 3,306 | 29% | 26% | 37% | 28%

Gender pay gap distribution 2024
HSBC Continental Europe | Fixed pay | Total compensation
Global Career Band | Total | Male | Female | Mean | Median | Mean | Median
GM | 2 | 2 | — |  |  |  |
MD | 122 | 97 | 25 | 20% | 11% | 19% | 11%
3 | 520 | 361 | 159 | 10% | 9% | 15% | 16%
4 | 1,804 | 1,119 | 685 | 12% | 10% | 14% | 13%
5 | 2,236 | 1,177 | 1,059 | 8% | 9% | 8% | 8%
6 | 1,531 | 633 | 898 | 9% | 12% | 10% | 9%
7 | 867 | 233 | 634 | (1)% | 3% | (2)% | 3%
8 | 210 | 73 | 137 | (9)% | (16)% | (9)% | (15)%
Overall gap | 7,292 | 3,695 | 3,597 | 29% | 25% | 36% | 27%

All the employees on permanent or temporary contracts eligible to the 2025 pay review (cut off as at 30 September 2025) were considered in
the gender pay gap and total compensation ratio calculations. It excludes apprentices and interns as pay review is driven by specific local rules
and only includes employees who had disclosed their gender by this date. The annual remuneration ratio of the highest compensation package
to the median annual remuneration of all employees is 15 at fixed pay (2024: 14) and 27 at total compensation level (2024: 30).

Developing skills and creating opportunities
HSBC Continental Europe is dedicated to equipping employees with
the skills needed to perform well in their roles, advance their careers,
and achieve their professional goals. This focus on continuous
learning is fundamental to building a high-performing, motivated
workforce and supporting the Bank’s long-term success. Employees
benefit from a range of high-quality training and development
programmes, governed by the People Management Policy (see page
87).
Mandatory Training
Mandatory training ensures that all employees, consultants,
contractors, and service providers meet the minimum standards for
safe and efficient operations of the Bank and its stakeholders. The
Procedure for Managing and Completing Mandated Learning
Activities guides the implementation of this training and relating
processes. Completion rates are closely monitored through a
dedicated dashboard which is accessible to managers - which are
responsible for ensuring their team have performed the training on an
annual basis and escalate non-compliance cases. The HSBC Group
Chief People & Governance Officer has oversight of mandatory
training, and local accountability is held by the HSBC Continental
Europe Head of People.
Learning platforms
HSBC Continental Europe's workforce has access to a number of
learning platforms and tools that enable them to manage their own
professional development and career progression. These include,
HSBC University, Degreed, and the HSBC Talent Marketplace.
HSBC Continental Europe's employees are encouraged to use the
integrated Degreed training platform and to regularly take time to
explore these learning opportunities to support their self-
development.
Future Skills and Management Programmes
The Future Skills curriculum is designed to equip employees with
essential capabilities, emphasising the development of soft skills and
cross-functional competencies.
HSBC Continental Europe has rolled out two management
programmes designed to strengthen the adaptability and agility of its
workforce:
– The People Manager Excellence Programme provides tailored
support to managers at all levels to develop managerial skills and
foster growth and inclusive leadership.
– The How we Lead Programme, launched in 2025 for top leaders, is
the new HSBC Group-wide leadership framework. This initiative
plays a pivotal role in advancing HSBC commitment to a culture that
balances high performance with high care, centred on HSBC
clients.
Mentoring Platform
Since 2020, HSBC Continental Europe has offered a dedicated
mentoring platform designed to facilitate connections among
employees across the network. This initiative enables participants to
engage with senior leaders, based on their stated learning or
development objectives.
The relationships developed as part of this programme increase
employee engagement and support employees’ career prospects,
which may improve employee retention. In addition, dedicated
mentoring programmes are launched to develop and engage targeted
population across Businesses and Functions.
In 2025, HSBC Continental Europe introduced the Care Ambassador
Network initiative, bringing together trained volunteers who support

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and listen to their peers on professional matters such as stress
management and reintegration following long-term absences. These
volunteers can also help to identify potential cases of psychological
risk and refer individuals to appropriate professionals when
necessary.

Navigating business transformation
HSBC Continental Europe makes strategic decisions, including
resource allocation, to align its business model with customer needs
and long-term strategy, recognising that such changes can impact
employees’ wellbeing. Several of these strategic decisions have been
implemented in 2025 (see 'Characteristics of HSBC Continental
Europe’s workforce' section on page 84).
The Bank follows the HSBC Group’s Employment Practices and
Relations Policy and all local employment requirements to minimise
adverse effects (see 'Fostering social dialogue' section on page 87
for information on how HSBC Continental Europe accounts for
employee concerns). In line with the European Union's regulatory
framework (namely Directive 98/59/EC and Directive 2001/23/EC),
HSBC Continental Europe consults with staff representatives before
making decisions on redundancies. To support employees through
transformations, the Bank has strengthened its communication
initiatives and implemented measures to help employees deal with
the challenges associated with these transformations, including:
– Proactive communication about upcoming changes to foster trust
and transparency.
– Resources and support provided to employee, developed in
collaboration with employee representatives and managers to
navigate potential transformation and mitigate the impact.
– Comprehensive support from both the People function,
management, and additional resources to explore internal
redeployment and external career opportunities - with a focus on
France and Germany in 2025.

Promoting work-life balance
HSBC Continental Europe recognises the challenges of balancing
workload and personal time in the financial services industry and
seeks to mitigate the potential negative physical and mental health
effects of insufficient personal time and recovery for employees.
HSBC Continental Europe prioritises supporting employee wellbeing
by embedding hybrid working and flexible leave policies, which often
exceed local regulatory requirements. Policies relating to working
models - including family-focused benefits, parental leave, and
flexible working arrangements can be found on the internal website.
Policies to support work-life balance
Parental leave
The HSBC Group's Employment Practices and Relations Policy
guarantee all employees access to maternity and paternity leave,
reflecting the Bank’s priority to family support. HSBC Continental
Europe fully complies with, and in some cases exceeds, the
requirements of the Directive on Work-Life Balance for Parents and
Carers (Directive 2019/1158), offering a minimum of four months'
parental leave per employee, and additional benefits in certain
jurisdictions. As an illustration, in 2025, the French Family Friendly
Leave Policy was updated, providing employees with salary
maintenance - the gap between national social security payments and
full salary being covered by HSBC - for second parents during
parental leave, and an inclusive terminology for diverse family
structures. HSBC Continental Europe Head of People is responsible
for implementing these policies across the Bank.
Flexible worki ng and Employee Assistance
Programme
HSBC Continental Europe actively promotes a healthy balance
between professional and personal life through flexible working
hours, family and caregiver support, and leave for special life events
such as exams or moving house. HSBC Continental Europe is
committed to employee wellbeing, offering hybrid working
arrangements to help manage workloads, reduce stress, and support
mental health. Key initiatives include:
– Learning programmes on the Degreed platform to help employees
and managers thrive in flexible work environments and foster a
collaborative culture.
– The “Feel Good at Work” initiative, which encourages open
dialogue and mutual support between employees and leaders.
– Annual communications reminding employees of their core leave
entitlements - such as the 10 consecutive days in France - and
encouraging regular breaks for rest and recovery.
HSBC Continental Europe Head of People oversees the
implementation of flexible working arrangements across the Bank.
W ork-life balance initiatives
HSBC Continental Europe continues to enhance work-life balance
through targeted initiatives, including the Care Ambassador Network
(see section 'Mentoring Platform' section on page 90) and flexible,
remote working options that often exceed industry standards. HSBC
Continental Europe offers a comprehensive range of leave options,
such as family-focused benefits for employees with dependents,
extended caregiving leave, and expanded bereavement leave.
Additionally, in some countries such as France, HSBC Continental
Europe offers employees a paid Volunteering Day, allowing them to
get involved with a charitable or partner association supported by the
Bank, or to engage in initiatives organised by the Sustainable
Development Department.
Furthermore, HSBC in France signed an agreement with the Ministry
of the Armed Forces in 2018 to support employees' involvement in
the operational reserve, to help employees balance their professional
responsibilities with their military commitments.
HSBC Continental Europe currently does not have dedicated
measures to support engagement in local democratic activities.
However, the Bank takes into consideration the challenges
associated with reconciling civic commitments with professional
activity.
Employee working hours are overseen locally, in line with applicable
regulations. Based on that monitoring, specific actions can be taken
to ensure employees’ working time are in line with applicable
requirements.

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Protecting customer and employee data
In order to deliver its full suite of products and services to its
customers and clients, the Bank handles vast amounts of personal
and business data. Protecting this data is fundamental to the Bank’s
duties to its customers and clients, ensuring both their privacy and
the integrity of its operations. This responsibility reflects a broader
challenge across the industry, where data protection has become
crucial to maintaining trust and resilience across an increasingly
complex regulatory and technological environment.
Each person has a fundamental right to privacy, and HSBC
Continental Europe recognises that any unauthorised access to
personal information - whether of employees or customers - could
lead to serious consequences such as identity theft, financial losses,
and reputational damage. Similarly, the unauthorised disclosure of
business data could negatively affect the Bank’s clients, undermining
their competitive position and increasing the risk of fraud. Managing
these risks are central to the Bank's approach, and data protection
measures are designed specifically to mitigate such negative
impacts.
The Bank’s commitment to data privacy is not only a matter of ethical
responsibility but also a legal obligation. Improper handling of data
and lack of robust security measures may result in breaches of
regulations such as the GDPR. Such breaches can lead to significant
fines, penalties, reputational damage, and loss of client trust, which is
crucial to the Bank’s business model. By embedding strong data
governance and compliance frameworks, HSBC Continental Europe
actively mitigates these risks and protects the interests of all
stakeholders.
Data privacy for employees
Data privacy is not a matter limited to customer relationships, but one
that also impacts the Bank's workforce. Improper data protection or
data management risks the exposure of personal or private
information, which could affect an employee’s psychological,
emotional, and even financial wellbeing. HSBC Continental Europe
proactively integrates data privacy considerations into its initiatives,
projects, and processing activities, formalised through Data Privacy
Impact Assessments which evaluate potential risks and identify
appropriate safeguards to mitigate any negative impacts on
individuals. By embedding data privacy principles across core
operations, the Bank ensures that the protection of personal
information and responsible data management remain central to its
long-term business strategy.
Employees are required to complete data privacy and cybersecurity
related training under the Global Mandatory Training programme (see
'Business Conduct' section on page 94 for more information on
trainings, including the completion rates in the reporting year).
Data privacy for customers
HSBC Continental Europe acknowledges the potential impact on its
customers and clients that could arise from data privacy breaches.
This could be in the form of identity theft, financial loss, reputational
damage, security threats, and possible discrimination from a breach
of customers' personal data, as well as affecting customers’
competitive position and increasing the risk of fraud from leaked data.
HSBC Continental Europe serves a large number of customers and
clients across the European Union and other regions, requiring the
processing of large amounts of personal information, and recognises
the responsibility that comes with this.
To ensure transparency and build trust, HSBC Continental Europe
provides privacy notices and statements directly to data subjects,
including individual customers, external staff, and job candidates,
before they share any information with the Bank. These notices may
be in the form of pop-up notifications, banners, links to the full privacy
policy, or written privacy statements. HSBC Continental Europe’s
commitments to data privacy are also publicly available through its
website. These statements contain valuable information about how
the Bank collects, uses, and protects personal data, its processing
standards, and how individuals can control their information and
exercise their data privacy rights. As a matter of compliance, both
Legal and the Data Protection Officer are ensuring that these
statements are up to date and visible to all data subjects.
Governance of data risk management
Given the vital importance of careful data management and
protection to the entire organisation, the management of data privacy
matters is governed centrally by the HSBC Group. HSBC Continental
Europe adheres to the stringent data protection policies and
guidelines set by the HSBC Group, as well as complying with all
applicable EU and local regulations and laws on privacy and protection
across its entities. This includes the GDPR. All data protection
policies are designed to equally safeguard the interests of employees
and customers.
All business must be conducted in compliance with the HSBC Data
Privacy Principles, which are outlined in the HSBC Group Code of
Conduct (see ‘Corporate culture’ section for more details, page 95).
The Principles define the fundamental standards of transparency,
fairness, and lawfulness which must be upheld when handling and
using any data collected, generated, held, and processed by the
Bank. This includes information about any and all transactions in
which the Bank is involved, including but not limited to information
relating to customer accounts and matters relating to business or
personal affairs, and also extends to its dealings, procedures, policies,
decisions, systems, and other confidential matters. Any breaches,
including unauthorised 'browsing' of accounts, can lead to disciplinary
action, including dismissal.
HSBC Continental Europe has three lines of defence that work
together to manage risks related to data privacy: firstly, the Data and
Architecture Office, followed by the Data Protection Officers and the
Data Privacy Risk Stewards, and finally the Internal Audit Function.
Group Data Risk Policy
HSBC Continental Europe adheres to the HSBC Group Data Risk
Policy in order to mitigate the risk of a data processing failure or any
breach of these principles, on either the part of the Bank or an
engaged third-party. The policy sets out key data processes and
controls that all markets, lines of business, functions, and legal
entities must put in place to reduce the likelihood and impact of risk
events. This mitigates the risk of potential legal and financial
repercussions and ultimately reinforces the trust that customers,
employees, and remaining stakeholders place in HSBC Continental
Europe.

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The HSBC Group Head of Regulatory Data Enhancement is
responsible for this policy at a global level. In addition, each local line
of business within HSBC Continental Europe has identified an
individual responsible for its effective implementation.
Data privacy risk is one of the four data risks covered by the Data
Risk Policy. The Control Framework, specific to data privacy, covers
six key areas: records of processing, internal and external data
transfers, privacy impact assessments, consent and choice, privacy
notices, and the rights of individuals. It details requirements for risk
assessments which apply to all high-risk processing activities, in
adherence to the GDPR requirements, as well as the Bank’s
approach to regular audits and testing.
Electronic Communications Policy
The HSBC Group Electronic Communications Policy, which applies to
all employees, requires all written electronic business
communications to be sent through approved channels or
applications which have an appropriate level of security. This policy
sets the minimum standards for all devices regardless of device type
or ownership, the location of the device, or the method of network
connection used to access the platform on which the electronic
communication is transmitted.
Details of what is permitted by employees when undertaking written
electronic business communications on approved business platforms,
whether internal, with a customer, or with a third party, are outlined
in the policy. All HSBC Continental Europe lines of business and
functions have a responsibility to implement and maintain relevant
procedures and controls to identify, monitor, and manage the risk
associated with electronic communications. This includes the
exclusive use of secure platforms to undertake business
communications, to lower the risk of data being compromised and
decrease the likelihood of a privacy breach.
These policies are also designed to fulfil the Bank’s legal
requirements to record, retain, and produce electronic
communications and, where necessary, enable it to disclose them to
regulators, law enforcement, courts, and/or other third parties.
The HSBC Group Head of Regulatory Compliance is responsible for
both policies within the HSBC Group, while the HSBC Continental
Europe’s Chief Compliance Officer is in charge of its implementation
across the Bank.
Unless otherwise stated, the global policies and procedures are
contained in Global Function and Global Business Functional
Instruction Manuals available on the intranet to all HSBC Continental
Europe’s employees and on all its websites for accessibility to its
customers.
Handling data related incidents
HSBC Continental Europe strives to prevent data-related incidents but
recognises that the risk cannot fully be eliminated. Therefore, in case
of a data breach or violation, HSBC Continental Europe has a process
in place to evaluate the severity of the incident, in line with its legal
and regulatory requirements, and where necessary, to notify data
protection authorities. This involves an assessment of the severity of
the breach, which determines whether regulators and individuals
need to be notified, the communication of the breach to senior
internal stakeholders, and the definition, implementation, and
oversight of a remedial action plan.
The number of data subject requests which miss the response
Service Level Agreement and the number of regulatory personal data
breaches notifications that miss the Service Level Agreement with
zero appetite threshold are continuously monitored to assess the
effectiveness of the Bank’s actions.
HSBC Continental Europe engages with individuals who want to
exercise their GDPR-related rights, to ensure they receive the correct
information in a timely manner. To raise a request or specific concern,
individuals can contact the HSBC Continental Europe Data Protection
Office directly, by post or through a dedicated email address, the
details of which are shared in all public privacy notices and
statements. Clients are also able to contact any relationship manager
with their concerns or queries.
The Bank must respond to data subject's requests within 30 days.
Failure to do so will breach the response timeline imposed by the
GDPR and may lead to regulatory actions. HSBC Continental Europe's
compliance with the 30-day timeline is closely monitored by its Data
Protection Officer. To ensure these requirements are met, and that
HSBC Continental Europe is complying with data subject's requests,
every line of business has assigned a control owner who is in charge
of monitoring and reporting the number of requests received and
confirming whether all of them were addressed effectively and in a
timely manner, as required by law.

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Governance
HSBC Continental Europe’s success relies on good business conduct,
including a culture of doing the right thing, high standards of
accountability, integrity in financial markets, and resilience across its
digital, physical, and operational footprint. Good business conduct is
about collectively taking responsibility and individually being
accountable and recognising the real impact the Bank’s actions have
on customers and the financial markets in which it operates.
HSBC Continental Europe requires that its employees act with the
utmost integrity and honesty in all professional interactions with
colleagues, customers, regulators, and vendors in the work
environment, at social or corporate events, or when using electronic
communications, technology or social media platforms.
The Bank asks its employees and associated persons to speak-up
about breaches of its code of conduct or any unethical or illegal
behaviour where it is lawful to do so. D irectors and employees must
act to deter, detect, and protect against such behaviours and report
all instances where they know or have a reasonable concern that an
offence has been committed.
HSBC Continental Europe has identified nine material business
conduct related IROs through its DMA, which are connected to its
own operations and its downstream value chain. Strong corporate
governance is essential, it builds trust, ensures transparency, and
supports sustainable long-term success. The following subsections
address these material IROs as well as how the Bank is acting to
promote a high standard of governance.

Governance impacts, risks and opportunities

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own operations
Positive Impact | Responsible corporate culture HSBC Continental Europe is focused on operating a strong and sustainable business that puts the customer first, values good governance, and gives its stakeholders confidence in how the HSBC Group does what it does. This in turn has a positive impact on customers, employees and society. | Short / Medium/ Long Term | Own operations
Risk | Conduct risk Ineffective conduct risk management may result in financial, regulatory and reputational risks. | Short/Medium/ Long Term | Own operations
Opportunity | Speak-up culture HSBC encourages a speak-up culture where individuals can raise any concerns about wrongdoing or unethical practices. This approach underscores the importance of integrity and responsible business conduct. | Short/Medium/ Long Term | Own operations
Negative Impact | Anti-bribery and corruption Preventing corruption and bribery is essential. Failure to do so may negatively affect staff, economic growth, customers ,shareholder’s trust , standards of living, and undermine long-term sustainable development and social equality. | Long term | Own operations
Negative Impact | Sanctions compliance (Entity Specific) Compliance with international sanctions and export controls is critical to the role that HSBC Continental Europe plays in the financial system. Failure to do so may exacerbate human rights violations or conflicts, and enable oppressive regimes at a human cost. | Medium/Long Term | Own operations
Negative Impact | Anti-money laundering (Entity Specific) As a financial institution, implementing robust anti-money laundering policies and procedures is essential. Without such measures, the broader economic and political landscape may be compromised, allowing illicit activities to thrive. | Medium/Long Term | Own operations
Risk | Regulatory and reputational risk from financial crime (Entity Specific) HSBC Continental Europe operates in a complex regulatory framework, necessitating strict adherence to numerous laws and regulations designed to prevent financial crime. Failure to achieve effective compliance may result in adverse regulatory, financial, and reputational consequences. | Medium/Long Term | Own operations
Negative Impact | Cybersecurity (Entity Specific) Insufficient cyber defences at the Bank or its critical third parties may lead to service disruptions, financial losses, and inconvenience for customers, while undermining local economic stability. Inadequate data protection can result in breaches of personal information, identity theft, and loss of trust in the Bank. | Short/Medium/ Long Term | Downstream
Risk | Cybersecurity failures (Entity Specific) Failure to maintain robust cybersecurity controls or comply with evolving regulations may result in operational disruptions, financial penalties, and reputational harm for the Bank. Reliance on third-party providers further heightens the risk of data breaches and service interruptions in the Bank. | Short/Medium/ Long Term | Own operations

With regards to business conduct matters, HSBC Continental Europe
followed a qualitative approach to assessing its material topics and
IROs, in line with that described in ‘The double materiality
assessment process’, page 51. This involved SME input from various
business functions, Risk Stewards and the First Line of Defence.
Unless otherwise stated, the business conduct assessment process
and its outcomes apply to all the markets in which HSBC Continental
Europe operates, and all activities undertaken by the Bank in the
reporting period. Where possible, HSBC Continental Europe
evaluates potential future risks and opportunities over short, medium
and long-term time horizons.

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Business conduct
HSBC Continental Europe aims to promote good business conduct in
all that it does. In order to establish good governance across all its
activities, policies and actions are largely centralised at HSBC Group
level and implemented by HSBC Continental Europe. Where
applicable, HSBC Group policies are supplemented by country-
specific policies and initiatives to address local requirements. The
Bank takes action with respect to corporate culture, whistleblowing,
financial crime and cybersecurity in line with the material topics
identified.
All HSBC Continental Europe employees are required to complete
Global Mandatory Training on corporate culture, business conduct,
whistleblowing, financial crime, regulatory compliance, risk, and
cybersecurity on an annual basis. The Global Mandatory Trainings are
designed to support the company's risk culture and reinforce the
expected risk behaviours of all employees as described in the Bank's
risk policies. Employees are additionally required to complete region-
or country-specific training where required by local legal
requirements. Managers must ensure that their direct reports
complete all assigned learning before the due date, as well as
monitor team completion rates and follow the manager guidance on
extenuating circumstances for late or non-completed training.
The Global Mandatory Training programme is delivered in three
'Trimesters' throughout the year:
– Trimester One focuses on the theme of protecting the Bank, the
staff and the customers. It covers topics related to protective
security, health and safety, wellbeing, and the promotion of
appropriate workplace behaviours — including the prevention of
bullying, harassment, and discrimination. The completion rate for
Trimester One training was 99.74 per cent as of 2025.
– Trimester Two focuses on financial crime risk. This involves the risk
that products and services will be exploited by criminals outside
HSBC Group, as well as by colleagues who may use their
knowledge and access to commit crimes or assist others in doing
so. The completion rate for Trimester Two training was 99.52 per
cent as of 2025 (2024: 96.8 per cent).
– Trimester Three focuses on why good conduct matters and the
critical role of conduct in shaping trust, protecting data, and
ensuring fair outcomes for customers, colleagues, and
communities. It covers business conduct-related topics, including
cybersecurity, data protection, competition law, conflicts of interest,
AI, social media, e-communication, and speak-up channels,
including whistleblowing. The completion rate for Trimester Three
was 98.28 per cent as of 2025.
The Global Mandatory Training is a key element of the Bank’s
Financial Crime Framework and contributes to promoting a strong risk
management culture. This training provides awareness of the key
financial crimes HSBC Continental Europe may encounter, including
money laundering, tax evasion, fraud, sanctions, bribery and
corruption, proliferation, and terrorist financing.
Additionally, HSBC Continental Europe's staff identified as being in
High-Risk Roles (‘HRR staff’) receive targeted financial crime risk
training. HRR staff includes, but is not limited to, the CEO, the CRO,
senior managers who are members of relevant governance
committees like RMM, relevant functional staff within Financial
Crime, Legal staff involved in the provision of AB&C and AML-related
legal advice, and relationship managers. To comply with AFA (Agence
Française Anticorruption, the French agency on anti-corruption)
requirements, a dedicated training curriculum, 'AB&C HRR Training',
has been designed and deployed to all HRR staff across the Bank,
with a completion rate of 93.32 per cent as of 2025 (2024: 91.76 per
cent).
In addition to Global Mandatory Training, HSBC Continental Europe
provides quarterly mandatory training dedicated to the countries'
CEOs. It comprises a 60-minute virtual training, covering a deep dive
into Financial Crime risks topics.

Corporate culture
HSBC Continental Europe’s business is shaped by the Bank’s
purpose and values and a desire to create sustainable long-term value
for stakeholders. Together with more formal policies and tools, the
Bank’s values provide a clear path to achieving its purpose and
delivering its strategy.
Framework for acting responsibly
The Framework for acting responsibly is a set of values that
represents strong foundations for the HSBC Group to deliver fair
outcomes for customers and to maintain order, and transparency on
financial markets. It guides the HSBC Group to do the right thing and
to recognise the real impact it has for customers and the financial
markets in which it operates. It is part of HSBC’s purpose and values
and good decision-making, governing the outcomes to be achieved
for customers and markets. It recognises cultural and behavioural
drivers of good outcomes and applies across all risk disciplines,
operational processes and technologies. The business conduct
principles are available on the HSBC Group website and i mplemented
in the internal HSBC framework based on the HSBC Book and the
Risk Management Framework.
Acting responsibly helps to focus on the impact HSBC Continental
Europe has on its customers and on financial markets. The Bank is
focused on operating a strong and sustainable business that puts the
customer first, values good governance, and gives its stakeholders
confidence in what the Bank does.
The HSBC Group's approach to Customer and Market Conduct (Our
Conduct Approach) sets the standard for all parts of the Bank to
ensure strategic aims are safely met by focusing on customers and
financial markets. In practice, there are five positive statements that
the HSBC Group is committed to delivering through its behaviour and
way of operating. The five outcomes shape the way HSBC thinks and
acts:
– Understanding customers’ needs
– Providing products and services that offer a fair exchange of value
– Serving customers’ ongoing needs, and put it right in case of
mistake
– Acting with integrity in the financial markets HSBC Continental
Europe operates in, and
– Operating with resilience and security to avoid harm to customers
and markets
The key factors in creating the right environment to enable the
c ustomer and market outc omes to be achieved are:
– Culture and behaviour
– Strategy and decision-making, and
– Governance and reporting
The approach is embedded into the way HSBC Continental Europe
develops, distributes, structures and executes products and services.
The approach to product design and development – including how
products are advertised – is set out in HSBC Continental Europe
policies and provides a clear basis from which strategic product and
service decisions can be made.

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HSBC Continental Europe businesses take the following approach:
– Carrying out robust testing and risk assessment during the design
and development of a product to establish whether there is an
identifiable need in the market.
– Considering the complexity of products and the possible financial
risks to customers when determining the target market.
– Offering a carefully selected range of products that are managed as
product offerings, thus helping to ensure that they continue to meet
customers’ needs and deliver fair value for money.
– Regularly reviewing products to help ensure they remain relevant
and perform in line with expectations.
The Framework for acting responsibly is a key area of focus for HSBC
Continental Europe to ensure that behavioural expectations and good
conduct outcomes are being achieved with multiple initiatives.
Conduct-related performance is covered by the quarterly HSBC
Continental Europe’s Conduct and Values Committee ('CVC'), chaired
by the HSBC Continental Europe CEO and attended by Operating
Committee members. It is responsible for carrying out decisions and
for ensuring that the issues linked to acting responsibly are
appropriately tracked within the quarterly CVC structure. The
quarterly HSBC Continental Europe Conduct and Values Committee
provide decision-making and guidance in respect of the Bank's
framework and regulatory compliance risk and takes responsibility for
the tracking of escalated issues.
Code of Conduct
All employees are required to abide by the HSBC Group Code of
Conduct (‘the Group Code’). Regional and country codes must be
aligned to the Group Code to the extent permitted by local law and
regulation. In France, employees are required to abide by the local
Code of Conduct (HSBC Continental Europe internal regulation), in
compliance with country-level regulatory requirements.
The Group Code outlines HSBC Group values, minimum ethical
standards, and business principles that govern how the Bank
operates. The Group Code is made accessible to all employees
internally, and staff additionally receive communications on
compliance with the Group Code from senior leadership and the
People function. The HSBC Continental Europe CEO is responsible
for ensuring compliance with the Group Code across the Bank. The
HSBC Continental Europe People function oversees the day-to-day
implementation of the Group Code and monitors its compliance.
All of the policies and procedures that govern corporate culture are
continually reviewed and improved, with consideration given to
stakeholder feedback. In 2025, the HSBC Group refreshed the
Purpose-led Conduct Approach with Our Conduct Approach.
Acting to ensure fair outcomes
Investigating business conduct complaints
Complaints related to business conduct process involves a structured
review of concerns raised by employees, clients, or other
stakeholders regarding behaviours, practices, or decisions that may
not align with the organisation’s established standards, policies, or
ethical guidelines. For employee concerns, HSBC Continental
Europe’s People function handles internal employee complaints and
personal conduct cases where breaches in policy and procedures
have been alleged or have ma terialised.
All employees at HSBC Continental Europe have access to
appropriate channels to raise concerns relating to themselves or
others.
Ensuring appropriate behaviours
HSBC Continental Europe sets standards designed to encourage
speak-up, establish responsible corporate culture, and ensure all
employees reflect HSBC’s values in their behaviour and in business
conduct. The objectives are to deliver fair outcomes for employees,
manage and resolve employee concerns and poor conduct fairly,
transparently, and consistently, and to protect HSBC from financial,
regulatory, and reputational risks. The code of conduct supplements
the global standards allowing all employees to understand their
responsibilities and the potential consequences of non-compliance.
The People function ensures that adjustments to variable pay and
ratings due to poor behaviour are captured in the compensation
systems, and that the adjustment is fair, consistent, and
proportionate to the conduct framework. Through the speak-up
channels, the People function may be involved in investigations
resulting from complaints and appeals including the whistleblowing
channel. The People function may also be involved in investigations
resulting from HSBC whistleblowing complaints and appeals. The
People function abides by the Raising employee concerns and
managing poor personal conduct policy to ensure that investigations
related to people risks are conducted fairly and thoroughly. The
Raising Employee Concerns and Managing Poor Personal Conduct
Policy applies to all employees, and is designed with the interests of
key stakeholders in mind. Employees are empowered to raise
concerns safely through the speak up channel including
whistleblowing channel in a confidential way, provided with clear
guidance and support for handling personal conduct cases by line
managers. The HSBC Group Chief People and Governance Officer,
together with the HSBC Continental Europe Head of People Solutions
and Advice are responsible for the implementation of the policy. The
policy is available to all employees in the intranet.

Whistleblowing and ‘Speak-up’
culture
HSBC Continental Europe is committed to fostering a speak-up
culture. Ensuring that all feel able to raise concerns is vital to creating
the right culture and to HSBC’s long-term success. Speaking up helps
HSBC take action to address issues and wrongdoing, with a range of
speak up channels available to make it as easy as possible. The HSBC
Group recognises that in certain situations using these channels may
not always be appropriate. That is why HSBC also offer HSBC
Confidential, the global whistleblowing channel, which allows
concerns to be raised about actions and behaviours that go against
Bank's values, break the law, or breach regulations or policies. By
speaking up, all staff are helping to protect HSBC, HSBC customers,
stakeholders and people.
One of the biggest advantages of open communication and a speak-
up culture is the ability to reduce risks and prevent potential breaches

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of the Bank’s code of conduct. When employees feel empowered to
raise concerns, organisations can act on them before a problem
becomes a greater threat. HSBC Continental Europe provides regular
awareness sessions and communication related to the speak-up
channels including whistleblowing channel to all employees. Insights
gathered help to ensure that employees feel comfortable raising
concerns or sharing ideas, confident that their needs will be
addressed without fear of reprisal. In addition, the annual snapshot
survey provides measure on employees’ confidence in using
whistleblowing channel without fear of reprisals or retaliation.
Speak-up Channels
The Bank has established speak-up channels to implement its speak-
up culture. These channels are available to all employees via an
internal web portal and through escalations to line managers. Senior
leadership promotes the speak-up culture and awareness of reporting
channels through regular communication and awareness initiatives
aimed at employees. Alerts and reports received through speak-up
channels are actioned promptly by independent teams from
Compliance, Financial Crime or the People function.
HSBC Confidential
Where concerns cannot be handled through other speak-up channels,
the Bank ensures that all employees and people in relationship with
HSBC, including subcontractors and suppliers, have access to the
Bank’s global whistleblowing channel, 'HSBC Confidential'. HSBC
Confidential is accessible at all times through independent third-party
hotlines and a web portal available in multiple languages.
Independent teams within the Compliance function handle reports at
either the local or the HSBC Group level depending on countries.
Concerns are investigated proportionately and independently, with
action taken where appropriat e. HSBC Continental Europe is
committed to ensuring investigations are carried out within a
reasonable timeframe and that feedback is provided to the reporter
promptly.
Whistleblowing Policy
HSBC Continental Europe follows the HSBC Group Whistleblowing
Policy which aims to prevent and correct all instances of unethical
and illegal behaviours by:
– Establishing minimum risk management and control requirements
to report unethical and illegal activities.
–Setting out procedures to ensure that reporting channels are
operated in a secure manner that ensure the identity of the reporter
and any third-party mentioned in the report is protected, and
prevents access thereto by non-authorised staff members.
–Defining procedures to investigate whistleblowing reports and, if
necessary, report the whistleblowing alerts to competent
authorities.
All whistleblowing investigators who are in charge of whistleblowing
cases must complete training provided by the Whistleblowing
Oversight Team (‘WOT’) or other agreed training. The training must
cover the requirements set out in the Whistleblowing Policy,
applicable laws and regulations and areas covered by the
investigations manuals. Records that training has been completed by
relevant parties must be kept by the Investigation Functions.
HSBC Continental Europe's Chief Compliance Officer (‘CCO’) has
ultimate authority over the implementation of the Whistleblowing
Policy and a dedicated, independent team attached to t he
Compliance department has oversight of its implementation. Key
information relating to whistleblowing at the Bank and the outcomes
of investigations into whistleblowing reports are escalated to the
aforementioned team in Compliance and the CCO. The Global
Whistleblowing Policy is available to all employees via the HSBC
Group’s intranet.
HSBC Continental Europe ensures that any failure to comply with
regulatory requirements related to whistleblowing is managed
appropriately, and strives to protect whistleblowers from any form of
retaliation. It does this by ensuring the confidentiality of these
channels, the personal data's protection and the anonymity of those
who use them, thereby protecting reporters from adverse
repercussions. The Bank safeguards the rights of reporters by
prohibiting any suspensions, lay-offs, demotions or withholding of
promotions, transfer of duties, withholding of training, and any other
administrative or punitive measure from the Bank directly in response
to whistleblowing.
Investigations
Independent risk teams carry out independent investigations to verify
all reports related to unethical or illegal allegations. These
investigations are fair and in-depth, and carried out within reasonable
or regulatory timeframes.
HSBC Continental Europe tracks the efficiency of its policies and
actions with respect to corporate culture, conduct risk and speak-up
channels (including protection of whistleblowers):
– The volume of cases received and the anonymity rate
– The number of alerts fully processed using existing reporting
channels
– The number of open cases under investigation and the associated
level of risk
– The allegation and substantiation risk themes
The quarterly Whistleblowing Oversight Committee reports on the
effectiveness of whistleblowing arrangements across HSBC
Continental Europe, including branches and subsidiaries.
The HSBC Continental Europe Audit Committee is responsible for
overseeing the local implementation of the procedures to ensure
confidentiality, protection and fair treatment of whistleblowers. The
HSBC Continental Europe Chief Compliance Officer provides a bi-
annual report to the HSBC Continental Europe Audit Committee.

Preventing financial crime
Financial crime risk is the risk of knowingly or unknowingly helping
parties to commit or to further engage in illegal activity through
HSBC, notably m oney lau ndering, terrorist and proliferation financing,
tax evasion, bribery and corruption, non-respect of international
sanctions, fraud and market abuse. Financial crime risk arises from
day-to-day banking operations involving customers, third parties and
employees.
HSBC Continental Europe is committed to acting with integrity and
conducting its global business activities in compliance with financial
crime laws, regulations and regulatory guidance everywhere it
operates. Compliance with financial crime laws and regulations, as
well as the Bank’s internal policies and procedures, allows HSBC
Continental Europe to fulfil its obligations to all its stakeholders,
safeguard its reputation, and safeguard the global financial system.
Global Financial Crime Policy
The Global Financial Crime (‘FC’) Policy is the policy established by
the HSBC Group to manage financial crime-related risks, including
bribery and corruption , fraud, tax evasion, money laundering, terrorist
financing, proliferation financing, sanctions and export control
compliance.
The FC Policy is driven by the requirements in the Bank’s home
markets, all of which are signatories of the UN Convention on
Corruption and have therefore undertaken to have relevant laws in
place. In addition to the Global FC Policy, HSBC Continental Europe

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has adopted several local FC Policies across its branches and
subsidiaries, including the entity-wide HSBC Continental Europe FC
Policy, and country-specific FC policies where this is required to meet
local legal requirements.
T he FC Policy requires all employees in the HSBC Group’s wholly-or
majority-owned or controlled legal entities to adhere to minimum risk
management and control requirements to detect, analyse, investigate
and mitigate the risk of the HSBC Group facilitating or being used to
facilitate financial crime, including but not limited to:
– The HSBC Group-wide minimum due diligence requirements an d
enhanced due diligence on customers and third parties assessed as
higher risk, and processes designed to monitor customer
transactions for the purpose of identifying suspicious activity.
– The use of specific tools to minimise the risk of financial crime, e.g.
all staff are required to use the HSBC Group-approved gifts and
entertainment register tool, prior to exchanging gifts with
customers, third parties or public officials where the gift value
surpasses thresholds defined in the Bank’s financial cri me policy.
– Controls to verify that minimum due diligence procedures have
been followed, specifically by requiring that checks are recorded in
HSBC Group’s internal system.
– Rejecting transactions, freezing assets or refusing to provide
services under circumstances defined by local legal requirements.
– Screening of customers and third parties to identify designated
persons, politically exposed people and material negative news on
different risks, including but not limited to, bribery and corruption,
human rights violation, environmental crime and organised crimes.
– Identification of potential sanctions exposure, sanctions or export
controls evasion attempts, through screening of transactions,
customers and third parties against sanctions lists.
– Identification of tax evasion facilitation and bribery and corruption
risk HSBC may be exposed to through third party relationships, and
the application of additional due diligence and monitoring to address
higher risk.
– Identify and authenticate the customer across all delivery channels
(e.g., branch, cards, digital and telephone) to protect against fraud or
loss of personal data.
– Managing card fraud by establishing appropriate processes,
systems, and controls to detect, deter, and disrupt unauthorised
requests for new cards, interception of cards/card authentication
methods, skimming or cloning of cards, unauthorised 'card not
present transactions', and limit losses from unauthorised card
transactions.
The FC Policy is published in the Compliance Functional Instruction
Manual, which is available to all HSBC employees. Furthermore, an
external Financial Crime Policy Statement has been published on the
HSBC Group’s public website.
HSBC Continental Europe’s Head of Financial Crime is responsible for
the implementation of financial crime policies across the Bank. This is
overseen by the HSBC Group Head of Financial Crime, the HSBC
Group Money Laundering Reporting Officer and the HSBC Group
Chief Risk and Compliance Officer. HSBC Continental Europe
performs an Enterprise-Wide Risk Assessment (‘EWRA’) to assess
bribery and corruption, sanctions,fraud, tax-evasion and money
laundering risks every year, in addition to contributing to the HSBC
Group-wide EWRA.
Approach to mitigating financial
crime
Preventative measures and controls against
financial crime
During 2025, HSBC Continental Europe has continued its efforts to
combat financial crime and reduce the impact of such crimes on the
organisation, customers, and communities. HSBC Continental Europe
continues to invest in its capabilities and system to fight financial
crime. Examples include the application of advanced analytics and AI,
improvements in the Bank’s transaction screening capabilities, and
enhancements in the Bank’s digital assets and currencies capabilities.
All staff are required to comply with financial crime-related controls
and risk management procedures at all times. HSBC Continental
Europe manages financial crime using a three line of defense model.
– The Bank’s First Line of Defence reviews and records FC risk
through approved systems in partnership with Risk Stewards within
the Second Line of Defence.
– The Second Line of Defence then reviews and challenges controls
recorded in HSBC Risk system (Helios).
– The Third Line of Defence undertakes independent reviews of
existing policies and procedures to ensure that HSBC Continental
Europe is compliant with relevant regulations, and that inefficiencies
in governance are addressed by the first and second lines of
defence.
The effectiveness of the controls are regularly monitored via the Risk
and Control Assessments that are updated frequently, and at least
annually.
HSBC Continental Europe's staff in high-risk roles receive targeted
financial crime training. See the ‘Business Conduct’ section on page
94 for the full detail of financial crime-related trainings, coverage and
completion rates.
Financial crime-related controls are assessed through key
performance indicators using automated management information
and analytics.
The governance meetings (e.g. RMM) are held regularly with the
attendance of HSBC Continental Europe OpCo member s, Risk and
Compliance and stakeholders from business lines and functions
where the key metrics, emerging risk and issues on financial crime
are reported and monitored.
Investigating credible incidents
Independent teams from Compliance, Financial Crime, Audit and the
People function conduct investigations into all credible allegations of
bribery and corruption, money laundering, tax evasion, fraud,
sanctions violations and any other kind of financial crime.
The outcomes of these investigations are escalated to HSBC
Continental Europe’s Head of Financial Crime, and where necessary
relevant cases are reported to relevant authorities.
7 Significant cybersecurity incidents are the ones classified as moderate, major or extreme according to the HSBC Continental Europe Risk Prioritisation Matrix.

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Compliance may pursue different actions depending on the severity
of the incident and can vary from sending a policy reminder to staff,
to issuing a breach notification to the employee's line manager,
which is recorded in the performance evaluation. Policy breaches are
recorded as management information and must be subject to a
corrective action plan. Policy breaches are tracked and reported on
until corrective actions have been completed and in rare instances,
severe breaches can contribute to the termination of employment.
During 2025, there was no instance of a conviction or fine for
violation of anti-corruption and anti-bribery laws (2024: no fines or
convictions).
Subject to regulatory exceptions, all Directors, employees and
contractors and consultants’ workers are required to co-operate with
any legitimate lawful government, regulatory or internal investigation.
They are expected to provide the maximum level of cooperation by,
among other things, being available to those conducting the
investigation and by providing any materials requested in a timely
manner.

Safeguarding data - Cybersecurity
HSBC Continental Europe operates in an extensive and complex
technology landscape. Cyberattacks may be directed at the Bank or at
its suppliers and contractors. The Bank follows internal policies and
procedures, as well as applicable data protection, electronic
communications and confidentiality laws and regulations to ensure a
consistent global approach to cybersecurity.
Cybersecurity Framework
All employees are required to abide by the Cybersecurity Framework,
which defines the minimum standards and controls to safeguard
customers, colleagues, and connected persons, including: the HSBC
Group-wide ‘defence in depth’ approach involving multiple security
layers; minimum business and technical controls to help prevent,
detect and mitigate cyber threats; procedures for the prompt
assessment of the severity of data breaches where such breaches
occur, with rapid notification of the impacted individuals and
competent authorities in compliance with all applicable law; and the
procedures for cybersecurity incident response.
HSBC Continental Europe’s Chief Information Officer and Chief
Information Security Officer (‘CISO’) are responsible for making sure
the HSBC Group Cybersecurity Framework is properly implemented
across the Bank. The Cybersecurity Framework is available to all
employees on HSBC Group’s intranet.
Key performance indicators, control effectiveness, and other matters
related to cybersecurity, including cyber incidents, are presented on a
monthly basis to the Bank’s Cybersecurity Steering Committee as
well as the IT Risk and Control Management Meeting to facilitate
ongoing awareness of the cybersecurity control framework.
Preventative measures and monitoring
processes
HSBC Continental Europe has adopted preventative measures to
minimise cybersecurity risks, with which all staff are expected to
comply, in particular staff in the three lines of defence.
HSBC Continental Europe continuously upgrades relevant IT systems
and invests in mitigating the potential threats of emerging
technologies. The Bank regularly updates and improves its software
solutions, including cloud security, identity and access management,
metrics and data analytics, and third-party security reviews. The
Bank’s cyber intelligence and threat analysis team continually
evaluates threat levels for the most prevalent cyber-attack types and
their potential outcomes, and tests controls to help reduce the
likelihood and impact of advanced malware, data leakage, exposure
through third parties and security vulnerabilities. In addition, HSBC
Continental Europe proactively collaborates with regulators to
participate in regular testing activities.
HSBC Continental Europe hosts an annual Cyber Awareness Month
for all colleagues covering topics such as online safety at home,
social media safety, safe hybrid working, and cyber incidents and
response. HSBC Group’s dedicated cybersecurity training and
awareness team provides a wide range of education and guidance to
both customers and HSBC Continental Europe staff about how to
identify and prevent online fraud. HSBC Continental Europe has
developed metrics to manage its compliance objectives and to
measure its cybersecurity controls’ performance. As in 2024, no
significant 7 cybersecurity incidents were recorded in 2025.
Where performance on key metrics is unsatisfactory or would put the
Bank at risk of non-compliance with regulatory obligations, the issue
is escalated to HSBC Continental Europe RMM, Risk Committee and
Board of Directors, as appropriate. In addition, HSBC Continental
Europe reports and reviews cyber risk and control effectiveness at
the HSBC Continental Europe Op Co and Board level to help ensure
there is appropriate visibility and governance of the risk and its
mitigating actions.
Response to cyber threats
Dedicated teams at HSBC Continental Europe, led by the HSBC
Continental Europe's CISO, take swift action in case of serious
identity theft, misappropriation of funds, damage to personal or
professional reputation, threats to personal security and
discrimination resulting from cyber-attacks. In the event of incidents,
the Bank’s CISO and relevant local CISOs are informed by the
security operations team and engage in cybersecurity incident
response protocols. To date, none of these attacks have had a
material impact on the Bank’s business or operations.

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Report on the certification of sustainability
information and verification of the
disclosure requirements under article 8 of
Regulation (EU) 2020/852
(For the year ended 31 December 2025)
HSBC Continental Europe
38, avenue Kléber
75116 Paris
To the Shareholders,
This report is issued in our capacity as Statutory Auditor of HSBC Continental Europe. It covers the sustainability information and the
information required by article 8 of Regulation (EU) 2020/852, relating to the financial year ended 31 December 2025 and included in the
Sustainability Statement in the Group’s management report.
Our work relating to this information was carried out in a changing environment characterised by uncertainties over the interpretation of the
legal texts and the development of market practices.
Pursuant to article L.233-28-4 of the French Commercial Code (Code de commerce), HSBC Continental Europe is required to include the
abovementioned information in a separate section of the Group's management report.
This information provides an understanding of the impact of the Group’s activity on sustainability matters, as well as the way in which these
matters influence the development of its business, performance and position. Sustainability matters include environmental, social and
corporate governance matters.
Pursuant to II of article L.821-54 of the aforementioned Code, our responsibility is to carry out the procedures necessary to issue a conclusion,
expressing limited assurance, on:
– compliance with the requirements of sustainability reporting standards adopted by the European Commission pursuant to article 29 ter of
Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013, as amended by Directive (EU) 2022/2464 of the European
Parliament and of the Council of 14 December 2022 (hereafter European Sustainability Reporting Standards or ESRS), of the process
implemented by HSBC Continental Europe to determine the information reported, including, where applicable to the entity, the obligation to
consult with the social and economic committee provided for in the sixth paragraph of article L.2312-17 of the French Labour Code (Code du
travail);
– compliance of the sustainability information included in the "Sustainability Statement" section of the Group management report with the
provisions of article L.233-28-4 of the French Commercial Code, including with the ESRS; and
– compliance with the requirements set out in article 8 of Regulation (EU) 2020/852.
This engagement is carried out in compliance with the ethical rules, including those on independence, and quality control, prescribed by the
French Commercial Code.
It is also governed by the H2A guidelines on limited assurance engagements on the certification of sustainability information and verification of
disclosure requirements set out in article 8 of Regulation (EU) 2020/852.
In the three separate parts of the report that follow, we present, for each of the parts covered by our engagement, the nature of the
procedures we carried out, the conclusions we drew from these procedures and, in support of these conclusions, the elements to which we
paid particular attention and the procedures we carried out with regards to these elements. We draw your attention to the fact that we do not
express a conclusion on any of these elements taken in isolation and that the procedures described should be considered in the overall context
of the formation of the conclusions issued in respect of each of the three parts of our engagement.
Finally, where it was deemed necessary to draw your attention to one or more items of sustainability information provided by HSBC
Continental Europe in the Group management report, we have included an emphasis of matter paragraph hereafter.
The limits of our engagement
As the purpose of our engagement is to provide limited assurance, the nature (choice of techniques), extent (scope) and timing of the
procedures are less than those required to obtain reasonable assurance.
This engagement does not provide a guarantee regarding the viability or the quality of the management of HSBC Continental Europe, in
particular it does not provide an assessment of the relevance of the choices made by HSBC Continental Europe in terms of action plans,
targets, policies, scenario analyses and transition plans, that extends beyond compliance with the ESRS reporting requirements.
Furthermore, in relation to forward-looking information, as forecasts are by definition uncertain, actual results may sometimes differ
significantly from the forecasts presented in the Group management report.
Our engagement does, however, allow us to express conclusions regarding the process for determining the sustainability information to be
reported, the sustainability information itself, and the information reported pursuant to article 8 of Regulation (EU) 2020/852, as to the absence

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of identification or, on the contrary, the identification of errors, omissions or inconsistencies of such importance that they would be likely to
influence the decisions that readers of the information subject to this engagement might make.
The sustainability information and the information required by article 8 of Regulation (EU) 2020/852 may be subject to inherent uncertainty
because of incomplete scientific knowledge and due to the quality of the external data used. Certain information is sensitive to the
methodological choices, assumptions and/or estimates used to prepare it, which are presented in the Group management report.
Compliance with the ESRS requirements of the process implemented by HSBC Continental Europe to determine the information
reported, including the requirement to consult the social and economic committee provided for in the sixth paragraph of article
L.2312-17 of the French Labour Code
Nature of procedures carried out
Our procedures consisted in verifying that:
– the process defined and implemented by HSBC Continental Europe, including the obligation to consult with the social and economic committee
provided for in the sixth paragraph of article L.2312-17 of the French Labour Code, has enabled it, in accordance with the ESRS, to identify and
assess its impacts, risks and opportunities related to sustainability matters, and to identify the material impacts, risks and opportunities that are
disclosed in the “Sustainability Statement” section of the Group management report; and
– the information provided on this process also complies with the ESRS.
Conclusion of the procedures carried out
On the basis of the procedures we have carried out, we have not identified any material errors, omissions or inconsistencies regarding the
compliance of the process implemented by HSBC Continental Europe with the ESRS.
Elements that received particular attention
The elements to which we paid particular attention concerning the compliance with the ESRS of the process implemented by HSBC
Continental Europe to determine the information reported are presented below.
Information on how the Group has updated its double materiality analysis can be found in the "Double materiality assessment process"
paragraph under "Material impacts, risks and opportunities" in Section 4 "Sustainability Statement" in the Group management report.
We obtained an understanding of the analyses performed by the Group through discussions with management and the persons we deemed
appropriate and by inspecting available documentation, and in particular through the assessment of the internal and external factors considered
in updating the double materiality assessment. These include changes in the scope of reporting, organisational changes and changes in
stakeholder interests and views.
Based on our professional judgement, our procedures mainly consisted in:
– critically assessing the documentation on the analyses carried out by the Group and on the approach used to identify the internal and external
factors to be taken into account;
– assessing the appropriateness of these internal and external factors in light of our knowledge of the Group and its circumstances;
– assessing the appropriateness of the impact and financial materiality assessment process used by the Group to determine the material
information reported in light of our knowledge of the Group and its circumstances, including any changes in assessment following the end of
the previous financial year;
– assessing the appropriateness of the description given in the Group management report.
Compliance of the sustainability information included in the Sustainability Statement in the Group management report with the
provisions of article L.233-28-4 of the French Commercial Code, including the ESRS
Nature of procedures carried out
Our procedures consisted in verifying that, in accordance with legal and regulatory requirements, including the ESRS:
– the disclosures provided provide an understanding of the general basis for the preparation and governance of the sustainability information
included in the “Sustainability Statement” section of the Group management report, including the general basis for determining the information
relating to the value chain and the exemptions from disclosures used;
– the presentation of this information ensures its readability and understandability;
– the scope chosen by HSBC Continental Europe for providing this information is appropriate; and
– on the basis of a selection, based on our analysis of the risks of non-compliance of the information provided and the expectations of users, this
information does not contain any material errors, omissions or inconsistencies, i.e., that are likely to influence the judgement or decisions of the
users of this information.
Conclusion of the procedures carried out
Based on the procedures we have carried out, we have not identified material errors, omissions or inconsistencies regarding the compliance of
the sustainability information included in the “Sustainability Statement” section of the Group management report with the provisions of article
L.233-28-4 of the French Commercial Code, including the ESRS.

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Emphasis of matter
Without qualifying the conclusion expressed above, we draw your attention to the “Greenhouse Gas Emissions” section of the Group’s
Sustainability Statement, which sets out the scope used to calculate financed emissions relating to the value chain (category 15 of Scope 3
under the GHG Protocol), as well as the changes and limitations relating to the methodology used for the estimates made and the availability of
data.
Elements that received particular attention
The elements to which we paid particular attention concerning the compliance of the sustainability information included in the “Sustainability
Statement” section of the Group management report with the provisions of article L.233-28-4 of the French Commercial Code, including the
ESRS, are presented below.
Information provided in application of environmental standards (ESRS E1 to E5)
Information disclosed relating to climate change (ESRS E1) can be found in the "Greenhouse gas emissions" section of the Group’s
Sustainability Statement.
The elements to which we paid particular attention concerning the compliance of this information with the ESRS are presented below.
With regard to greenhouse gas emissions, in particular financed emissions (Scope 3, category 15 of the GHG Protocol), our procedures mainly
consisted in:
– asking what internal control and risk management procedures the Group has put in place to ensure the compliance of the disclosed
information;
– reviewing the methodology used to calculate the estimated data and the sources of information on which these estimates are based;
– gaining an understanding of the scope covered by the greenhouse gas inventory and assessing its justification in terms of the reference
framework applied (as mentioned in the Sustainability Statement) and the Group's activities, in particular the scope of the assets covered for
the calculation of financed emissions;
– verifying that the basis for calculating financed emissions corresponds to the scope of assets covered as described in the Sustainability
Statement and reconciling it with the consolidated balance sheet;
– assessing the appropriateness of the sectoral proxies and emissions factors used by the Group and verifying, on the basis of samples, that they
are correctly used;
– verifying the mathematical accuracy of the calculation of financed emissions and the conversion calculations on own operations, on the basis of
samples;
– assessing whether the information given in respect of the revision of comparative data complies with the presentation requirements of the
ESRS.
Compliance with the reporting requirements set out in article 8 of Regulation (EU) 2020/852
Nature of procedures carried out
Our procedures consisted in verifying the process implemented by HSBC Continental Europe to determine the eligible and aligned nature of the
activities of the entities included in the scope of consolidation.
They also involved verifying the information reported pursuant to article 8 of Regulation (EU) 2020/852, which involves checking:
– compliance with the rules governing the presentation of this information to ensure that it is readable and understandable;
– on the basis of a selection, the absence of material errors, omissions or inconsistencies in the information provided, i.e., information likely to
influence the judgement or decisions of users of this information.
Conclusion of the procedures carried out
Based on the procedures we have carried out, we have not identified any material errors, omissions or inconsistencies in relation to compliance
with the requirements of article 8 of Regulation (EU) 2020/852.
Elements that received particular attention
We established that there were no such elements to address in our report.
Neuilly-sur-Seine, 25 February 2026
The Statutory Auditor
PricewaterhouseCoopers Audit

PricewaterhouseCoopers Audit
Amel Hardy-Ben Bdira |
Partner |

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Sustainability Statement

Appendix
Assets for the calculation of GAR (Template 1)
This table presents assets used in the calculation of the GAR
analysed by counterparty type and asset class. Total assets are
further categorised between covered assets in both numerator and
denominator, and assets excluded from the GAR calculation, with
aligned covered assets presented by environmental objective. This
table is provided in Annex VI to the Disclosures Delegated Act.
The table has been duplicated to present the information separately
based on Turnover and CapEx KPIs as reported by the Bank's
counterparties, with each of these being replicated for stock and flow
respectively.
As a proportion of total taxonomy eligible exposures, taxonomy
aligned enabling activities represents 3.85 per cent based on
counterparty turnover KPI and 4.94 per cent based on counterparty
CapEx KPI.
The gross carrying amount reported excludes impairment allowances
for all banking exposures. As a result, Total Assets reported in this
table is not comparable to Total Assets reported in the Bank's
balance sheet with the difference due to impairment allowances on
banking exposures.
Financial guarantees represent financial guarantees granted by the
Bank to support an underlying loan or debt security. The assessment
of eligibility and alignment is based on the reported KPIs of the
obligor in relation to the underlying loan since information on specific
use of proceeds for these loans is not available.

Template 1. Assets for the calculation of GAR - Based on Counterparty Turnover – (Stock)
|  | 31 Dec 2025
| Stock Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 18,939 | 5,331 | 728 | 675 | 25 | — | 28 | — | — | — | 91 | 205 |  |  |  |
3 | Financial undertakings | 12,866 | 2,095 | 284 | 261 | 23 | — | — | — | — | — | 4 | 33 |  |  |  |
4 | Loans and advances | 12,140 | 1,804 | 265 | 248 | 17 | — | — | — | — | — | 3 | 25 |  |  |  |
5 | Debt securities, including UoP | 718 | 291 | 19 | 13 | 6 | — | — | — | — | — | 1 | 8 |  |  |  |
6 | Equity instruments | 8 | — | — | — | — | — | — | — | — |  | — | — |  |  |  |
7 | Non-financial undertakings | 3,832 | 1,122 | 440 | 410 | 2 | — | 28 | — | — | — | 85 | 172 |  |  |  |
8 | Loans and advances | 3,747 | 1,106 | 434 | 407 | — | — | 27 | — | — | — | 85 | 169 |  |  |  |
9 | Debt securities, including UoP | 46 | 5 | 4 | 3 | — | — | 1 | — | — | — | — | 1 |  |  |  |
10 | Equity instruments | 39 | 11 | 2 | — | 2 | — | — | — | — |  | — | 2 |  |  |  |

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Template 1. Assets for the calculation of GAR - Based on Counterparty Turnover – (Stock) (continued)
|  | 31 Dec 2025
| Stock Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
11 | Households | 1,897 | 1,896 | — | — | — |  | — |  |  | — | — | — |  |  |  |
12 | – of which loans collateralised by residential immovable property | 1,893 | 1,893 | — | — | — |  | — |  |  | — | — | — |  |  |  |
13 | – of which building renovation loans | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
14 | – of which motor vehicle loans | 4 | 3 | — | — |  |  |  |  |  | — | — | — |  |  |  |
15 | Local governments financing | 194 | 194 | — | — | — | — | — | — | — | — | — | — |  |  |  |
16 | Housing financing | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
17 | Other local government financing | 194 | 194 | — | — | — | — | — | — | — | — | — | — |  |  |  |
18 | Collateral obtained by taking possession: residential and commercial immovable properties | 2 | 2 | — | — | — |  | — |  |  | — | — | — |  |  |  |
19 | Exposures included on a voluntary basis | 148 | 22 | 4 | 4 | — | — | — | — | — | — | 2 | — |  |  |  |
20 | Total GAR assets | 18,939 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
21 | Assets not covered for GAR calculation | 232,256 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
22 | Central governments and Supranational issuers | 22,481 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
23 | Central banks exposure | 65,007 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
24 | Trading book | 71,300 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
25 | Undertakings and entities not subject to CSRD | 55,821 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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Template 1. Assets for the calculation of GAR - Based on Counterparty Turnover – (Stock) (continued)
|  | 31 Dec 2025
| Stock Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
26 | SMEs and undertakings (other than SMEs) not subject to CSRD disclosure obligations | 40,104 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
27 | Loans and advances | 38,112 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
28 | – of which loans collateralised by commercial immovable property | 4,450 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
29 | – of which building renovation loans | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
30 | Debt securities | 1,758 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 | Equity instruments | 234 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
32 | Non-EU country counterparties not subject to CSRD disclosure obligations | 15,717 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Loans and advances | 14,637 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | Debt securities | 1,080 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Equity instruments | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | Derivatives | 81 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | On demand interbank loans | 2,119 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Cash and cash- related assets | 50 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Other categories of assets (e.g. Goodwill, commodities etc.) | 15,397 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Total assets | 251,195 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Off-balance sheet exposures (stock) to Undertakings subject to CSRD disclosure obligations and local governments
41 | Financial guarantees | 343 | 219 | 97 | 90 | — | — | 7 | — | — | — | 6 | 84 |  |  |  |
42 | Assets under management 1 | 13,315 | 6,827 | 1,452 | 1,395 | 13 | 4 | 37 | 3 | — | — | 45 | 813 |  |  |  |
43 | – of which debt securities | 7,131 | 2,708 | 1,083 | 1,038 | 10 | 4 | 29 | 2 | — | — | 31 | 567 |  |  |  |
44 | – of which equity | 3,384 | 1,319 | 369 | 357 | 3 | — | 8 | 1 | — | — | 14 | 246 |  |  |  |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale totalling EUR 48,407 million, of which EUR
18,789 million were assessed as taxonomy-eligible and EUR 488 million as taxonomy-aligned based on counterparties’ Turnover KPIs.

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Template 1. Assets for the calculation of GAR – Based on Counterparty CapEx – (Stock)
|  | 31 Dec 2025
| Stock Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 18,939 | 6,125 | 998 | 974 | 1 | — | 23 | — | — | — | 119 | 303 |  |  |  |
3 | Financial undertakings | 12,866 | 2,351 | 248 | 247 | 1 | — | — | — | — | — | 5 | 13 |  |  |  |
4 | Loans and advances | 12,140 | 2,065 | 233 | 232 | 1 | — | — | — | — | — | 4 | 10 |  |  |  |
5 | Debt securities, including UoP | 718 | 285 | 15 | 15 | — | — | — | — | — | — | 1 | 3 |  |  |  |
6 | Equity instruments | 8 | 1 | — | — | — | — | — | — | — |  | — | — |  |  |  |
7 | Non-financial undertakings | 3,832 | 1,663 | 745 | 722 | — | — | 23 | — | — | — | 111 | 289 |  |  |  |
8 | Loans and advances | 3,747 | 1,645 | 738 | 716 | — | — | 22 | — | — | — | 110 | 285 |  |  |  |
9 | Debt securities, including UoP | 46 | 10 | 7 | 6 | — | — | 1 | — | — | — | 1 | 4 |  |  |  |
10 | Equity instruments | 39 | 8 | — | — | — | — | — | — | — |  | — | — |  |  |  |
11 | Households | 1,897 | 1,896 | — | — | — |  | — |  |  | — | — | — |  |  |  |
12 | – of which loans collateralised by residential immovable property | 1,893 | 1,893 | — | — | — |  | — |  |  | — | — | — |  |  |  |
13 | – of which building renovation loans | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
14 | – of which motor vehicle loans | 4 | 3 | — | — |  |  |  |  |  | — | — | — |  |  |  |
15 | Local governments financing | 194 | 194 | — | — | — | — | — | — | — | — | — | — |  |  |  |
16 | Housing financing | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |

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Template 1. Assets for the calculation of GAR – Based on Counterparty CapEx – (Stock) (continued)
|  | 31 Dec 2025
| Stock Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
17 | Other local government financing | 194 | 194 | — | — | — | — | — | — | — | — | — | — |  |  |  |
18 | Collateral obtained by taking possession: residential and commercial immovable properties | 2 | 2 | — | — | — |  | — |  |  | — | — | — |  |  |  |
19 | Exposures included on a voluntary | 148 | 19 | 5 | 5 | — | — | — | — | — | — | 3 | 1 |  |  |  |
20 | Total GAR assets | 18,939 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
21 | Assets not covered for GAR calculation | 232,256 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
22 | Central governments and Supranational issuers | 22,481 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
23 | Central banks exposure | 65,007 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
24 | Trading book | 71,300 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
25 | Undertakings and entities not subject to CSRD | 55,821 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
26 | SMEs and undertakings (other than SMEs) not subject to CSRD disclosure obligations | 40,104 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
27 | Loans and advances | 38,112 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
28 | – of which loans collateralised by commercial immovable property | 4,450 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
29 | – of which building renovation loans | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
30 | Debt securities | 1,758 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 | Equity instruments | 234 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
32 | Non-EU country counterparties not subject to CSRD disclosure obligations | 15,717 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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Template 1. Assets for the calculation of GAR – Based on Counterparty CapEx – (Stock) (continued)
|  | 31 Dec 2025
| Stock Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
33 | Loans and advances | 14,637 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | Debt securities | 1,080 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Equity instruments | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | Derivatives | 81 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | On demand interbank loans | 2,119 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Cash and cash- related assets | 50 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Other categories of assets (e.g. Goodwill, commodities etc.) | 15,397 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Total assets | 251,195 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Off-balance sheet exposures (stock) to Undertakings subject to CSRD disclosure obligations and local governments
41 | Financial guarantees | 343 | 236 | 106 | 102 | — | — | 4 | — | — | — | 12 | 77 |  |  |  |
42 | Assets under management 1 | 13,315 | 7,732 | 2,168 | 2,126 | 11 | 1 | 25 | 5 | — | — | 105 | 1,092 |  |  |  |
43 | – of which debt securities | 7,131 | 3,325 | 1,576 | 1,540 | 10 | 1 | 21 | 4 | — | — | 75 | 744 |  |  |  |
44 | – of which equity instruments | 3,384 | 1,607 | 592 | 586 | 1 | — | 4 | 1 | — | — | 30 | 348 |  |  |  |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale totalling EUR 48,407 million, of which EUR
21,356 million were assessed as taxonomy-eligible and EUR 7,503 million as taxonomy-aligned based on counterparties’ CapEx KPIs.

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Template 1. Assets for the calculation of GAR – Based on Counterparty Turnover – (Flow)
|  | 31 Dec 2025
| Flow Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 8,878 | 1,952 | 352 | 341 | 3 | — | 8 | — | — | — | 67 | 69 |  |  |  |
3 | Financial undertakings | 7,176 | 1,455 | 164 | 163 | 1 | — | — | — | — | — | 1 | 5 |  |  |  |
4 | Loans and advances | 7,000 | 1,358 | 161 | 160 | 1 | — | — | — | — | — | 1 | 4 |  |  |  |
5 | Debt securities, including UoP | 176 | 97 | 3 | 3 | — | — | — | — | — | — | — | 1 |  |  |  |
6 | Equity instruments | — | — | — | — | — | — | — | — | — |  | — | — |  |  |  |
7 | Non-financial undertakings | 1,500 | 320 | 188 | 178 | 2 | — | 8 | — | — | — | 66 | 64 |  |  |  |
8 | Loans and advances | 1,469 | 316 | 186 | 178 | — | — | 8 | — | — | — | 66 | 62 |  |  |  |
9 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — |  |  |  |
10 | Equity instruments | 31 | 4 | 2 | — | 2 | — | — | — | — |  | — | 2 |  |  |  |
11 | Households | 108 | 108 | — | — | — |  | — |  |  | — | — | — |  |  |  |
12 | – of which loans collateralised by residential immovable property | 107 | 107 | — | — | — |  | — |  |  | — | — | — |  |  |  |
13 | – of which building renovation loans | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
14 | – of which motor vehicle loans | 1 | 1 | — | — |  |  |  |  |  | — | — | — |  |  |  |
15 | Local governments financing | 84 | 67 | — | — | — | — | — | — | — | — | — | — |  |  |  |

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Template 1. Assets for the calculation of GAR – Based on Counterparty Turnover – (Flow) (continued)
|  | 31 Dec 2025
| Flow Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
16 | Housing financing | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
17 | Other local government financing | 84 | 67 | — | — | — | — | — | — | — | — | — | — |  |  |  |
18 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
19 | Exposures included on a voluntary basis | 10 | 2 | — | — | — | — | — | — | — | — | — | — |  |  |  |
20 | Total GAR assets | 8,878 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
21 | Assets not covered for GAR calculation | 45,573 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
22 | Central governments and Supranational issuers | 8,114 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
23 | Central banks exposure | 12,553 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
24 | Trading book | 5,294 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
25 | Undertakings and entities not subject to CSRD | 19,349 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
26 | SMEs and undertakings (other than SMEs) not subject to CSRD disclosure obligations | 13,888 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
27 | Loans and advances | 13,147 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
28 | – of which loans collateralised by commercial immovable property | 879 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
29 | – of which building renovation loans | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
30 | Debt securities | 701 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 | Equity instruments | 40 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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Template 1. Assets for the calculation of GAR – Based on Counterparty Turnover – (Flow) (continued)
|  | 31 Dec 2025
| Flow Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
32 | Non-EU country counterparties not subject to CSRD disclosure obligations | 5,461 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Loans and advances | 5,047 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | Debt securities | 414 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Equity instruments | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | Derivatives | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | On demand interbank loans | 263 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Cash and cash- related assets | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Other categories of assets (e.g. Goodwill, commodities etc.) | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Total assets | 54,451 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Off-balance sheet exposures (Flow) to Undertakings subject to CSRD disclosure obligations and local governments
41 | Financial guarantees | 222 | 92 | 23 | 22 | — | — | 1 | — | — | — | 4 | 15 |  |  |  |
42 | Assets under management 1 | 4,573 | 1,599 | 415 | 387 | 7 | 1 | 19 | 1 | — | — | 16 | 224 |  |  |  |
43 | – of which debt securities | 2,494 | 830 | 241 | 233 | 1 | 1 | 6 | — | — | — | 6 | 121 |  |  |  |
44 | – of which equity instruments | 2,079 | 769 | 174 | 154 | 6 | — | 13 | 1 | — | — | 10 | 103 |  |  |  |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale with respective flow totalling EUR 28,938
million, of which EUR 10,627 million of flow was assessed as taxonomy-eligible and EUR 289 million of flow as taxonomy-aligned based on counterparties’
Turnover KPIs.

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Template 1. Assets for the calculation of GAR – Based on Counterparty CapEx – (Flow)
|  | 31 Dec 2025
| Flow Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 8,878 | 2,367 | 351 | 347 | — | — | 4 | — | — | — | 60 | 88 |  |  |  |
3 | Financial undertakings | 7,176 | 1,553 | 135 | 135 | — | — | — | — | — | — | 1 | 8 |  |  |  |
4 | Loans and advances | 7,000 | 1,455 | 131 | 131 | — | — | — | — | — | — | 1 | 7 |  |  |  |
5 | Debt securities, including UoP | 176 | 98 | 4 | 4 | — | — | — | — | — | — | — | 1 |  |  |  |
6 | Equity instruments | — | — | — | — | — | — | — | — | — |  | — | — |  |  |  |
7 | Non-financial undertakings | 1,500 | 622 | 216 | 212 | — | — | 4 | — | — | — | 59 | 80 |  |  |  |
8 | Loans and advances | 1,469 | 621 | 216 | 212 | — | — | 4 | — | — | — | 59 | 80 |  |  |  |
9 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — |  |  |  |
10 | Equity instruments | 31 | 1 | — | — | — | — | — | — | — |  | — | — |  |  |  |
11 | Households | 108 | 108 | — | — | — |  | — |  |  | — | — | — |  |  |  |
12 | – of which loans collateralised by residential immovable property | 107 | 107 | — | — | — |  | — |  |  | — | — | — |  |  |  |
13 | – of which building renovation loans | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
14 | – of which motor vehicle loans | 1 | 1 | — | — |  |  |  |  |  | — | — | — |  |  |  |
15 | Local governments financing | 84 | 84 | — | — | — | — | — | — | — | — | — | — |  |  |  |
16 | Housing financing | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
17 | Other local government financing | 84 | 84 | — | — | — | — | — | — | — | — | — | — |  |  |  |

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Template 1. Assets for the calculation of GAR – Based on Counterparty CapEx – (Flow) (continued)
|  | 31 Dec 2025
| Flow Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
18 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — | — |  | — |  |  | — | — | — |  |  |  |
19 | Exposures included on a voluntary basis | 10 | — | — | — | — | — | — | — | — | — | — | — |  |  |  |
20 | Total GAR assets | 8,878 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
21 | Assets not covered for GAR calculation | 45,573 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
22 | Central governments and Supranational issuers | 8,114 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
23 | Central banks exposure | 12,553 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
24 | Trading book | 5,294 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
25 | Undertakings and entities not subject to CSRD | 19,349 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
26 | SMEs and undertakings (other than SMEs) not subject to CSRD disclosure obligations | 13,888 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
27 | Loans and advances | 13,147 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
28 | – of which loans collateralised by commercial immovable property | 879 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
29 | – of which building renovation loans | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
30 | Debt securities | 701 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
31 | Equity instruments | 40 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
32 | Non-EU country counterparties not subject to CSRD disclosure obligations | 5,461 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Loans and advances | 5,047 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | Debt securities | 414 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Equity instruments | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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Template 1. Assets for the calculation of GAR – Based on Counterparty CapEx – (Flow) (continued)
|  | 31 Dec 2025
| Flow Mn EUR | a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p
| Total [gross] carrying amount | of which Taxonomy-eligible | of which Taxonomy-aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling | Non-assessed exposures | of which financing non-material activities of counterparties | of which exposures financing counterparties reporting in accordance with Article 7(9) | of which not assessed considered non- material by the credit institution
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
36 | Derivatives | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | On demand interbank loans | 263 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Cash and cash- related assets | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Other categories of assets (e.g. Goodwill, commodities etc.) | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Total assets | 54,451 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Off-balance sheet exposures (Flow) to Undertakings subject to CSRD disclosure obligations and local governments
41 | Financial guarantees | 222 | 108 | 35 | 34 | — | — | 1 | — | — | — | 5 | 23 |  |  |  |
42 | Assets under management 1 | 4,573 | 1,812 | 600 | 580 | 3 | 1 | 14 | 2 | — | — | 42 | 277 |  |  |  |
43 | – Of which debt securities | 2,494 | 886 | 328 | 319 | 2 | 1 | 5 | 1 | — | — | 22 | 153 |  |  |  |
44 | – Of which equity instruments | 2,079 | 926 | 272 | 261 | 1 | — | 9 | 1 | — | — | 20 | 124 |  |  |  |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale with respective flow totalling EUR 28,938
million, of which EUR 12,397 million of flow was assessed as taxonomy-eligible and EUR 4,326 million of flow as taxonomy-aligned based on counterparties’
CapEx KPIs.

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GAR Sector information (Template 2)
This table provides sectoral information on the Bank’s taxonomy-
eligible and taxonomy-aligned on-balance sheet exposures in the
banking book, covering both financial and non-financial
counterparties.
Rows 1 to 10 present a breakdown of eligible and aligned exposures
by sector of economic activity, based on NACE codes reflecting the
principal activity of the immediate counterparty. These rows show
the top ten sectors with the highest levels of taxonomy eligibility.
In line with the amended reporting framework introduced by the
Omnibus Delegated Act, nuclear and gas activities are reported
within the main table as dedicated rows 11 and 12, replacing the
standalone nuclear and gas templates that applied under the previous
framework. These rows present on-balance sheet exposures related
to nuclear and gas activities, respectively.
The table has been duplicated to present the information separately
based on Turnover and CapEx KPIs as reported by the Bank's
counterparties.

Template 2. GAR sector information - Based on Counterparty Turnover
| 31 Dec 2025
| a | b | c | d | e | f | g | h | i | j
| Breakdown by sector – NACE 4 digits level (code and label) (Million EUR) | Total [Gross] carrying amount | of which Taxonomy eligible | of which Taxonomy aligned | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
1 | K64.19 – Other monetary intermediation | 8,722 | 1,658 | 194 | 187 | 7 | — | — | — | —
2 | K65.11 – Life insurance | 2,248 | 195 | 31 | 15 | 16 | — | — | — | —
3 | L68.20 – Renting and operating of own or leased real estate | 190 | 180 | 78 | 78 | — | — | — | — | —
4 | U99.00 – Activities of extraterritorial organisations and bodies | 144 | 144 | — | — | — | — | — | — | —
5 | N82.99 – Other business support service activities n.e.c. | 197 | 125 | 72 | 71 | — | — | 1 | — | —
6 | O84.13 – Regulation of and contribution to more efficient operation of businesses | 121 | 121 | — | — | — | — | — | — | —
7 | D35.11 – Production of electricity | 227 | 102 | 84 | 84 | — | — | — | — | —
8 | O84.11 – General public administration activities | 129 | 80 | — | — | — | — | — | — | —
9 | C21.20 – Manufacture of pharmaceutical preparations | 424 | 79 | — | — | — | — | — | — | —
10 | G46.62 – Wholesale of machine tools | 117 | 75 | 25 | 25 | — | — | — | — | —
11 | Nuclear activities | 37 | 32 | 32 |  |  |  |  |  |
12 | Fossil gas activities | 24 | 24 | — |  |  |  |  |  |
13 | Of which non-assessed exposures |  |  |  |  |  |  |  |  |

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Template 2. GAR sector information -Based on Counterparty CapEx
| 31 Dec 2025
| a | b | c | d | e | f | g | h | i | j
| Breakdown by sector - NACE 4 digits level (code and label) (Million EUR) | Total [Gross] carrying amount | of which Taxonomy eligible | of which Taxonomy aligned | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
1 | K64.19 – Other monetary intermediation | 8,722 | 1,716 | 201 | 201 | — | — | — | — | —
2 | M70.10 – Activities of head offices | 577 | 213 | 20 | 9 | — | — | 11 | — | —
3 | L68.20 – Renting and operating of own or leased real estate | 190 | 188 | 154 | 154 | — | — | — | — | —
4 | K66.19 – Other activities auxiliary to financial services, except insurance and pension funding | 414 | 184 | — | — | — | — | — | — | —
5 | D35.11 – Production of electricity | 227 | 156 | 145 | 145 | — | — | — | — | —
6 | U99.00 – Activities of extraterritorial organisations and bodies | 144 | 144 | — | — | — | — | — | — | —
7 | H52.29 – Other transportation support activities | 176 | 133 | — | — | — | — | — | — | —
8 | N82.99 – Other business support service activities n.e.c. | 197 | 130 | 65 | 65 | — | — | — | — | —
9 | O84.13 – Regulation of and contribution to more efficient operation of businesses | 121 | 121 | — | — | — | — | — | — | —
10 | K65.11 – Life insurance | 2,248 | 99 | 20 | 20 | — | — | — | — | —
11 | Nuclear activities | 66 | 30 | 30 |  |  |  |  |  |
12 | Fossil gas activities | 18 | 18 | 1 |  |  |  |  |  |
13 | Of which non-assessed exposures |  |  |  |  |  |  |  |  |

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GAR KPI stock (Template 3)
This table presents eligible and aligned exposures as a proportion of total covered assets by Taxonomy environmental objective. The table has
been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the Bank's counterparties.

Template 3. GAR KPI stock – Based on Counterparty Turnover
|  | 31 Dec 2025
| % (compared to corresponding total covered assets in the denominator) | a Taxonomy-eligible | b | c | d | e | f | g | h | i | j | k | l Proportion of Taxonomy aligned in Taxonomy eligible | m Non-assessed exposures
|  | Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling |  |
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 28.15 | 3.84 | 3.56 | 0.13 | — | 0.15 | — | — | — | 0.48 | 1.08 | 13.66 |
3 | Financial undertakings | 16.28 | 2.21 | 2.03 | 0.18 | — | — | — | — | — | 0.03 | 0.25 | 13.56 |
4 | Loans and advances | 14.86 | 2.18 | 2.04 | 0.14 | — | — | — | — | — | 0.03 | 0.20 | 14.70 |
5 | Debt securities, including UoP | 40.45 | 2.62 | 1.72 | 0.89 | — | 0.01 | — | — | — | 0.07 | 1.14 | 6.48 |
6 | Equity instruments | 5.39 | 1.02 | 1.00 | 0.01 | — | — | 0.01 | — |  | 0.01 | 0.92 | 19.01 |
7 | Non-financial undertakings | 29.29 | 11.49 | 10.71 | 0.05 | — | 0.72 | 0.01 | — | — | 2.20 | 4.50 | 39.24 |
8 | Loans and advances | 29.54 | 11.61 | 10.87 | 0.01 | — | 0.72 | 0.01 | — | — | 2.24 | 4.54 | 39.29 |
9 | Debt securities, including UoP | 10.19 | 8.68 | 7.21 | 0.05 | — | 1.42 | — | — | — | 1.02 | 2.08 | 85.11 |
10 | Equity instruments | 27.72 | 3.98 | — | 3.98 | — | — | — | — |  | — | 3.98 | 14.34 |
11 | Households | 99.98 | — | — | — |  | — |  |  | — | — | — | — |
12 | – of which loans collateralised by residential immovable property | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
13 | – of which building renovation loans | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
14 | – of which motor vehicle loans | 90.93 | — | — |  |  |  |  |  | — | — | — | — |
15 | Local governments financing | 100.00 | — | — | — | — | — | — | — | — | — | — | — |
16 | Housing financing | — | — | — | — |  | — |  |  | — | — | — | — |
17 | Other local government financing | 100.00 | — | — | — | — | — | — | — | — | — | — | — |
18 | Collateral obtained by taking possession: residential and commercial immovable properties | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
19 | Exposures included on a voluntary basis | 14.61 | 2.50 | 2.46 | 0.01 | — | 0.03 | — | — | — | 1.49 | 0.06 | 17.12 |
20 | GAR - Total GAR assets | 28.15 | 3.84 | 3.56 | 0.13 | — | 0.15 | — | — | — | 0.48 | 1.08 | 13.66 |

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Template 3. GAR KPI stock – Based on Counterparty CapEx
|  | 31 Dec 2025
| % (compared to corresponding total covered assets in the denominator) | a | b | c | d | e | f | g | h | i | j | k | l | m
| Taxonomy-eligible |  | Proportion of Taxonomy aligned in Taxonomy eligible | Non-assessed exposures
| Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
| % | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 32.34 | 5.27 | 5.15 | — | — | 0.12 | — | — | — | 0.63 | 1.60 | 16.30 |
3 | Financial undertakings | 18.27 | 1.92 | 1.92 | — | — | — | — | — | — | 0.04 | 0.10 | 10.52 |
4 | Loans and advances | 17.02 | 1.92 | 1.92 | — | — | — | — | — | — | 0.04 | 0.09 | 11.26 |
5 | Debt securities, including UoP | 39.64 | 2.02 | 1.99 | 0.01 | — | 0.02 | — | — | — | 0.08 | 0.37 | 5.10 |
6 | Equity instruments | 6.72 | 2.14 | 2.12 | 0.02 | — | — | — | — |  | 0.02 | 1.68 | 31.89 |
7 | Non-financial undertakings | 43.39 | 19.48 | 18.87 | — | — | 0.60 | 0.01 | — | — | 2.89 | 7.53 | 44.89 |
8 | Loans and advances | 43.90 | 19.73 | 19.12 | — | — | 0.60 | 0.01 | — | — | 2.94 | 7.61 | 44.93 |
9 | Debt securities, including UoP | 22.48 | 16.02 | 14.55 | 0.01 | — | 1.46 | — | — | — | 1.21 | 7.62 | 71.26 |
10 | Equity instruments | 19.25 | 0.05 | 0.05 | — | — | — | — | — |  | 0.04 | — | 0.24 |
11 | Households | 99.98 | — | — | — |  | — |  |  | — | — | — | — |
12 | – of which loans collateralised by residential immovable property | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
13 | – of which building renovation loans | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
14 | – of which motor vehicle loans | 90.93 | — | — |  |  |  |  |  | — | — | — | — |
15 | Local governments financing | 100.00 | — | — | — | — | — | — | — | — | — | — | — |
16 | Housing financing | — | — | — | — |  | — |  |  | — | — | — | — |
17 | Other local government financing | 100.00 | — | — | — | — | — | — | — | — | — | — | — |

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Template 3. GAR KPI stock – Based on Counterparty CapEx
|  | 31 Dec 2025
| % (compared to corresponding total covered assets in the denominator) | a | b | c | d | e | f | g | h | i | j | k | l | m
| Taxonomy-eligible |  | Proportion of Taxonomy aligned in Taxonomy eligible | Non-assessed exposures
| Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
| % | % | % | % | % | % | % | % | % | % | % | % | % | %
18 | Collateral obtained by taking possession: residential and commercial immovable properties | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
19 | Exposures included on a voluntary basis | 12.58 | 2.95 | 2.87 | 0.02 | — | 0.06 | — | — | — | 2.07 | 0.48 | 23.48 |
20 | GAR - Total GAR assets | 32.34 | 5.27 | 5.15 | — | — | 0.12 | — | — | — | 0.63 | 1.60 | 16.30 |

GAR KPI flow (Template 4)
This table presents the flow of eligible and aligned exposures as a
proportion of total new covered assets by Taxonomy environmental
objective.
In accordance with the regulatory guidance, flow is defined as the
gross carrying amount of newly incurred exposures (i.e. new loans
and advances, debt securities, equity instruments) that have been
incurred during the year, without deducting the amounts of loan
repayments or disposals of debt securities or equity instruments that
have occurred during the year. Institutions should therefore not
compute the numerator and the denominator of the flow KPI as
exposures on the disclosure reference date (T) minus exposures on
the disclosure reference date (T-1).
Due to data challenges for certain asset classes, the approach set out
below was followed. Firstly, where loan signature dates and
origination amounts are available, the gross carrying amount of newly
incurred exposures by transaction or customer is calculated without
deducting repayments or disposals. As the starting point to identify
new loans granted during the year is the stock of loans at
31 December 2025, it is possible that some loans both granted and
repaid during 2025 have not been accounted for in the flow. To
identify the date that loans have been granted, the signature date
currently available is used. Some renegotiated loans may have a
different signature date than the original loan.
Where signature dates and origination amounts are not available, flow
is calculated as the exposure at date (T) minus the exposure at date
(T-1) by individual transaction or customer or internal sub-
classification level, defaulting to zero where the result is negative.
This approach is also used for overdrafts and other revolving credit
facilities, as multiple drawings and repayments in the period could
result in a disproportionately high gross flow which is a multiple of
that of the stock, and in any case, it is not practicable or possible to
identify every individual drawing through the year.
For certain categories of assets, such as settlement accounts and
items in the course of collection from other banks, the flow
calculation is not considered relevant and as such, these exposures
are excluded from the flow calculation. These exposures do not
finance taxonomy eligible or aligned activities.

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Template 4. GAR KPI flow – Based on Counterparty Turnover
|  | 31 Dec 2025
| % (compared to corresponding total covered assets in the denominator) | a | b | c | d | e | f | g | h | i | j | k | l | m
| Taxonomy-eligible |  | Proportion of Taxonomy aligned in Taxonomy eligible | Non-assessed exposures
| Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Polluti-on (PPC) | Biodiversity and Ecosystems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 21.98 | 3.96 | 3.84 | 0.03 | — | 0.09 | — | — | — | 0.75 | 0.77 | 18.03 |
3 | Financial undertakings | 20.27 | 2.29 | 2.28 | 0.01 | — | — | — | — | — | 0.02 | 0.07 | 11.29 |
4 | Loans and advances | 19.39 | 2.29 | 2.28 | 0.01 | — | — | — | — | — | 0.01 | 0.06 | 11.86 |
5 | Debt securities, including UoP | 55.18 | 1.87 | 1.83 | 0.01 | — | 0.03 | — | — | — | 0.15 | 0.43 | 3.38 |
6 | Equity instruments | 5.39 | 1.02 | 1.00 | 0.01 | — | — | 0.01 | — |  | 0.01 | 0.92 | 19.01 |
7 | Non-financial undertakings | 21.36 | 12.52 | 11.91 | 0.10 | — | 0.50 | 0.01 | — | — | 4.39 | 4.23 | 58.62 |
8 | Loans and advances | 21.53 | 12.68 | 12.16 | — | — | 0.51 | 0.01 | — | — | 4.48 | 4.21 | 58.89 |
9 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — |
10 | Equity instruments | 13.38 | 5.06 | — | 5.06 | — | — | — | — |  | — | 5.06 | 37.84 |
11 | Households | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
12 | – of which loans collateralised by residential immovable property | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
13 | – of which building renovation loans | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
14 | – of which motor vehicle loans | 100.00 | — | — |  |  |  |  |  | — | — | — | — |
15 | Local governments financing | 79.46 | — | — | — | — | — | — | — | — | — | — | — |
16 | Housing financing | — | — | — | — |  | — |  |  | — | — | — | — |
17 | Other local government financing | 79.46 | — | — | — | — | — | — | — | — | — | — | — |
18 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — |  | — |  |  | — | — | — | — |
19 | Exposures included on a voluntary basis | 20.16 | 0.46 | 0.26 | 0.20 | — | — | — | — | — | 0.10 | 0.32 | 2.27 |
20 | GAR – Total GAR assets | 21.98 | 3.96 | 3.84 | 0.03 | — | 0.09 | — | — | — | 0.75 | 0.77 | 18.03 |

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Template 4. GAR KPI flow – Based on Counterparty CapEx
|  | 31 Dec 2025
| % (compared to corresponding total covered assets in the denominator) | a | b | c | d | e | f | g | h | i | j | k | l | m
| Taxonomy-eligible |  | Proportion of Taxonomy aligned in Taxonomy eligible | Non-assessed exposures
| Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transitional | of which enabling
| Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | GAR - Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |
2 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 26.66 | 3.95 | 3.90 | — | — | 0.05 | — | — | — | 0.67 | 1.00 | 14.82 |
3 | Financial undertakings | 21.64 | 1.88 | 1.88 | — | — | — | — | — | — | 0.02 | 0.10 | 8.70 |
4 | Loans and advances | 20.78 | 1.87 | 1.87 | — | — | — | — | — | — | 0.02 | 0.09 | 9.01 |
5 | Debt securities, including UoP | 55.62 | 2.33 | 2.28 | 0.02 | 0.01 | 0.01 | 0.01 | — | — | 0.17 | 0.56 | 4.18 |
6 | Equity instruments | 6.72 | 2.14 | 2.12 | 0.02 | — | — | — | — |  | 0.02 | 1.68 | 31.89 |
7 | Non-financial undertakings | 41.48 | 14.39 | 14.10 | — | — | 0.29 | — | — | — | 3.87 | 5.39 | 34.69 |
8 | Loans and advances | 42.26 | 14.69 | 14.39 | — | — | 0.30 | — | — | — | 3.95 | 5.51 | 34.76 |
9 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — |
10 | Equity instruments | 4.58 | 0.01 | 0.01 | — | — | — | — | — |  | 0.01 | — | 0.24 |
11 | Households | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
12 | – of which loans collateralised by residential immovable property | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
13 | – of which building renovation loans | 100.00 | — | — | — |  | — |  |  | — | — | — | — |
14 | – of which motor vehicle loans | 100.00 | — | — |  |  |  |  |  | — | — | — | — |
15 | Local governments financing | 100.00 | — | — | — | — | — | — | — | — | — | — | — |
16 | Housing financing | — | — | — | — |  | — |  |  | — | — | — | — |
17 | Other local government financing | 100.00 | — | — | — | — | — | — | — | — | — | — | — |
18 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — |  | — |  |  | — | — | — | — |
19 | Exposures included on a voluntary basis | 0.65 | 0.65 | 0.37 | 0.28 | — | — | — | — | — | 0.14 | 0.45 | 100.00 |
20 | GAR – Total GAR assets | 26.66 | 3.95 | 3.90 | — | — | 0.05 | — | — | — | 0.67 | 1.00 | 14.82 |

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KPI off-balance sheet exposures (Template 5)
This table presents eligible and aligned off-balance sheet exposures
as a proportion of all financial guarantees or total assets under
management as applicable.
For these funds managed by HSBC Continental Europe, a look
through to the underlying investments has been undertaken to
identify those investments that are subject to CSRD 6 where eligibility
and alignment can be assessed. Where the underlying investments
are themselves funds and where information regarding these funds
has not been made available, these funds are treated as non-CSRD 6.
For the managed funds where possible, the proportion of debt and
equity has been calculated, and the eligibility and alignment
assessment performed, based on the underlying investments as at
31 December 2025. However, for some funds where this information
is not yet available, the latest available 2025 data from November
2025 has been used.
The KPI for assets under management includes assets where HSBC
Continental Europe has delegated portfolio management of the
assets to another financial undertaking. For these portfolios, limited
data is available regarding the underlying instruments making up the
funds. Assets for which the portfolio management has been
delegated to the Bank by another financial undertaking are not
included.
The table has been duplicated to present the information separately
based on Turnover and CapEx KPIs as reported by the Bank's
counterparties.
This table has also been duplicated to present the information
separately based on the flow of financial guarantees and assets under
management.
As for the on-balance sheet flow presented in Template 4, the
methodology to calculate flow for assets under management aims to
calculate new exposures by gross carrying amount, and not compute
the flow as exposures on the disclosure reference date (T) minus
exposures on the disclosure reference date (T-1). The methodology
applied is dependent on data availability across the funds being
managed by HSBC Continental Europe. For the majority of funds,
where data availability allows, flow has been calculated as units
purchased through the year by individual ISIN or legal entity identifier,
multiplied by actual purchase price for each respective unit. Where
this is not possible, the next approach applied is to calculate flow as
total units purchased through the year by individual ISIN or legal
entity identifier multiplied by a proxy price based on the year end
market value. For a small number of funds, where the previous two
approaches were not possible, flow has been calculated as number
of units at (T) minus number of units at (T-1), multiplied by a proxy
price based on the year end market value.

Template 5. KPI off-balance sheet exposures – Based on Counterparty Turnover – (Stock)
|  | 31 Dec 2025
% (compared to corresponding total off-balance sheet assets) | a | b | c | d | e | f | g | h | i | j | k | l
Taxonomy eligible |  | Non-assessed exposures
Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transit- ional | of which enabling
Climate Change Mitigat-ion (CCM) | Climate Change Adaptat-ion (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosyst- ems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 63.92 | 28.16 | 26.09 | — | 0.01 | 2.04 | 0.02 | — | — | 1.68 | 24.42 |
2 | Assets under management (AuM KPI) 1 | 51.27 | 10.90 | 10.47 | 0.10 | 0.03 | 0.28 | 0.02 | — | — | 0.34 | 6.10 |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale totalling EUR 48,407 million. If these
exposures had been included in the calculation, the AuM KPI based on counterparties' Turnover, would have been 41.50% for Taxonomy-eligible and 3.14% for
Taxonomy-aligned.

Template 5. KPI off-balance sheet exposures – Based on Counterparty CapEx – (Stock)
|  | 31 Dec 2025
% (compared to corresponding total off-balance sheet assets) | a | b | c | d | e | f | g | h | i | j | k | l
Taxonomy eligible |  | Non-assessed exposu-res
Taxonomy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transit- ional | of which enabling
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resour-ces (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosyst- ems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 68.75 | 30.85 | 29.65 | — | 0.07 | 1.06 | 0.07 | — | — | 3.36 | 22.32 |
2 | Assets under management (AuM KPI) 1 | 58.07 | 16.28 | 15.97 | 0.08 | 0.01 | 0.19 | 0.03 | — | — | 0.79 | 8.20 |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale totalling EUR 48,407 million. If these
exposures had been included in the calculation, the AuM KPI based on counterparties' CapEx, would have been 47.13% for Taxonomy-eligible and 15.67% for
Taxonomy-aligned.

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Template 5. KPI off-balance sheet exposures – Based on Counterparty Turnover – (Flow)
|  | 31 Dec 2025
% (compared to corresponding total off-balance sheet assets) | a | b | c | d | e | f | g | h | i | j | k | l
Taxon-omy eligible |  | Non-assessed exposures
Taxon-omy aligned | Breakdown per environmental objective | of which Use of Proceeds | of which transit- ional | of which enabling
Climate Change Mitigat-ion (CCM) | Climate Change Adaptat-ion (CCA) | Water and marine resour-ces (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosyst- ems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 41.16 | 10.36 | 9.96 | — | — | 0.39 | 0.01 | — | — | 1.59 | 6.88 |
2 | Assets under management (AuM KPI) 1 | 34.96 | 9.07 | 8.46 | 0.14 | 0.03 | 0.41 | 0.03 | — | — | 0.34 | 4.89 |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale with respective flow totalling EUR 28,938
million. If these exposures had been included in the calculation, the AuM flow KPI based on counterparties' Turnover, would have been 36.48% for Taxonomy-
eligible and 2.10% for Taxonomy-aligned.

Template 5. KPI off-balance sheet exposures – Based on Counterparty CapEx – (Flow)
|  | 31 Dec 2025
% (compared to corresponding total off- balance sheet assets) | a | b | c | d | e | f | g | h | i | j | k | l
Taxonomy eligible |  | Non-assess-ed exposures
Taxonomy aligned | Breakdown per environmental objective | of which Use of Procee-ds | of which transit- ional | of which enabli- ng
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollut-ion (PPC) | Biodive-rsity and Ecosys- tems (BIO)
|  | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 48.52 | 15.94 | 15.66 | 0.01 | — | 0.27 | — | — | — | 2.22 | 10.23 |
2 | Assets under management (AuM KPI) 1 | 39.63 | 13.12 | 12.69 | 0.07 | 0.01 | 0.31 | 0.04 | — | — | 0.91 | 6.05 |

1 For the 2025 financial year, the gross carrying amount of assets under management excludes exposures held for sale with respective flow totalling EUR 28,938
million. If these exposures had been included in the calculation, the AuM flow KPI based on counterparties' CapEx, would have been 42.40% for Taxonomy-
eligible and 14.70% for Taxonomy-aligned.

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Risk review

Risk review

Contents
123 | Key highlights
124 | Approach to managing risk
124 | HSBC Continental Europe's risk appetite
124 | Risk management
127 | Key developments and risk profile
128 | Risk factors
139 | Financial risk
139 | Credit and counterparty credit risk
162 | Market risk
165 | Treasury risk
171 | Non financial risk
171 | Operational risk
173 | Resilience risk
175 | Model risk
175 | Legal risks and litigation management
176 | Compliance
178 | Climate and nature risks management
186 | Other risks
186 | Reputational risk management
186 | Insurable risk coverage
187 | Periodic control
189 | Tax risk

All Pillar 3 and regulatory documentation is available on the Internet.
Key highlights

Principal Regulatory Ratios (non audited)
| At
| 31 Dec 2025 | 31 Dec 2024
| % | %
Capital Ratios |  |
Common equity tier 1 | 16.4 | 18.8
Total tier 1 | 18.4 | 21.1
Total capital | 21.6 | 23.5
Leverage Ratio | 4.3 | 5.4
Liquidity Ratios 1 |  |
Liquidity Coverage Ratio ("LCR")1,2 | 147 | 150
Net Stable Funding Ratio ("NSFR")1,2 | 164 | 137

1 In line with CRR requirements, LCR is disclosed as an average of 12 months
and NSFR at reporting date.
2 The components of the LCR and NSFR calculation have been represented to
comply with EBA reporting requirements.

Risk-Weighted Assets – by Risk Type (non audited)
| RWAs | Capital required
| 31 Dec 2025 | 31 Dec 2024 | 31 Dec 2025 | 31 Dec 2024
| €m | €m | €m | €m
Credit Risk | 43,259 | 46,008 | 3,461 | 3,680
Counterparty Credit Risk | 5,472 | 6,815 | 438 | 545
Market Risk | 3,948 | 3,786 | 316 | 302
Operational Risk | 7,624 | 6,688 | 610 | 535
Total Risk-Weighted Assets | 60,303 | 63,297 | 4,825 | 5,049

Loan Impairment Charges/Impaired Loans
| At
| 31 Dec 2025 | 31 Dec 2024
(in million of euros/%) | €m | €m
Total Gross loans | 49,120 | 57,479
Total Impaired loans (B)1 | 1,361 | 1,613
Impaired loans % | 2.77% | 2.81%
Total loan impairment charge at 31 December | (166) | (91)
Impairment allowances (A)1 | (454) | (362)
Impairment ratio: A/B | 33.36% | 22.44%

1 Including only stage 3 and POCI.

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Risk review

Approach to managing risk
HSBC Continental Europe's risk
appeti te
HSBC Continental Europe’s risk appetite defines the level and types
of risk that we are willing to take to achieve its strategic objectives.
The Board reviews and approves the risk appetite regularly to make
sure it remains fit for purpose.
HSBC Continental Europe's enterprise-wide risk appetite is expressed
holistically through various risk management mechanisms and
activities, in both quantitative and qualitative terms and is formally
articulated through its Risk Appetite Statement (‘RAS’).
The risk appetite is considered, developed and enhanced through the
following principles:
– alignment with our strategy, purpose, values, external risk
– environment, reputational and customer needs;
– compliance with applicable laws, regulations and regulatory
priorities;
– forward looking insights into future risk exposure;
– sufficiency of available capital, liquidity and balance sheet leverage
to absorb the risks;
– capacity and capabilities of people to manage the landscape;
– functionality, capacity and resilience of available systems to manage
the risk landscape;
– effectiveness of the applicable control environment to mitigate risk;
and
– internally and externally disclosed commitments.
Performance against the RAS is reported to the Risk Management
Meeting ('RMM') to support targeted insight and discussion on
breaches of risk appetite and any associated mitigating actions. This
reporting allows risks to be promptly identified and mitigated, and
informs risk-adjusted remuneration to drive a strong risk culture.

Risk management
HSBC Continental Europe recognises that the primary role of risk
management is to protect its customers, business, colleagues,
shareholders and the communities that it serves, while ensuring that
the Bank is able to support its strategy and provide sustainable
growth.
In addition, HSBC Continental Europe recognises the importance of a
strong risk culture, which refers to its shared attitudes, values and
standards that shape behaviours including those related to risk
awareness, risk taking and risk management. All HSBC Continental
Europe's people are responsible for the management of risk, with
ultimate supervisory oversight residing with the Board.
The Risk function is led by the Chief Risk Officer, who is responsible
for the risk management framework ('RMF') of HSBC Continental
Europe.
This responsibility includes establishing risk policy, monitoring risk
profiles, and forward-looking risk identification and management. Risk
is made up of sub-functions covering all risks of HSBC Continental
Europe activities. The Risk function is part of the Second Line of
Defence, and is independent from commercial activities.
Stress testing
HSBC Continental Europe operates a comprehensive stress testing
program that supports its risk management and capital planning. It
includes execution of stress tests mandated by its regulators to
assess vulnerabilities in individual banks and/or the financial banking
sector under hypothetical adverse scenarios. The stress testing
program is supported by dedicated teams and infrastructure and is
overseen at the most senior levels of the bank, as stress test
outcomes are presented to the HSBC Continental Europe Risk
Committee and Board.
Stress testing assesses the capital and liquidity strength of the bank
through a rigorous examination of its resilience to external shocks. It
also helps it understand and mitigate risks, inform its decisions about
capital and liquidity levels (including the risk appetite statement) and
confirm the strength of its strategic and financial plans. As well as
undertaking regulatory-driven stress tests, HSBC Continental Europe
conducts its own internal stress tests, such as macroeconomic and
event-driven stress tests, concentration risk stress tests on specific
portfolios, market risk stress tests or reverse stress tests implying
potential extreme conditions that would make the business model of
the bank non-viable. Some of these internal stress tests are included
in the Recovery Plan that helps understand the likely outcomes of
adverse business or economic conditions and in the identification of
appropriate risk mitigating actions.
In 2025, HSBC Continental Europe performed a range of stress tests
within the stress testing program and reported the results of these
stress tests to senior management. The macroeconomic internal
stress tests, conducted throughout 2025, considered combinations of
various potential impacts, in particular geopolitical tensions, financial
instability, interest rate shocks, FX volatility, deep recession, supply
chain disruption, climate and nature risk and operational risk.
Stress testing scenarios are usually centrally coordinated by HSBC
Risk and Finance teams, and broken down into regional and country
scenarios to ensure global consistency.
To have an appropriate coverage of the specific risks faced by HSBC
Continental Europe, scenarios specific to Continental Europe are also
developed by HSBC Continental Europe’s Risk and Finance teams,
with the support of expert panels.
Regulatory stress tests
Stress testing is also an important regulatory tool to assess the
resilience of the banking sector and of individual banks to adverse
economic or financial developments.
The results inform regulators of the capital adequacy of individual
institutions and can have an effect on minimum capital requirements,
and therefore the payment of dividends, going forward.
HSBC Continental Europe is subject to regulatory stress testing,
including the EU-wide stress test coordinated by the European
Banking Aut hority.

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Risk review

Risk management framework
HSBC Continental Europe aims to use a comprehensive risk
management approach across the organisation and across all risk
types, underpinned by its culture and values. This is outlined in the
RMF, including the key principles and practices that HSBC Continental
Europe's employs in managing material risks, both financial and non-
financial.
The RMF sets out in a consistent way how HSBC Continental Europe
identifies, assesses and manages the risks that matter the most with
respect to its ability to operate, grow, and meet external
commitments. It translates the strategy, values and commitments
into practical actions and risk-based decisions.
The Group Risk and Compliance function is responsible for the
Group's RMF. Independent from the business segments, including its
sales and trading functions, it provides challenge, oversight and
appropriate balance of risk and reward in decision-making. Their
responsibility includes establishing global policy, monitoring risk
profiles, and identifying and managing forward-looking risk.
Responsibility for managing both financial and non-financial risk,
including regulatory compliance and financial crime, lies with HSBC
Continental Europe employees. They are required to manage the risks
of the business and operational activities for which they are
responsible. HSBC Continental Europe maintains oversight of its risks
through the various Risk Stewards, as well as the accountability held
by the chief risk and compliance officers.
HSBC Continental Europe maintains an effective and sound control
environment and regularly tests and monitors the effectiveness of its
controls, which aim to prevent risks from materialising, detect when
they do, and recover and learn from issues in a timely manner within
its risk appetite.
HSBC Continental Europe’s ongoing focus is on helping to ensure
more effective oversight and better end-to-end identification and
management of financial and non-financial risks. This is overseen by
the Enterprise Risk Management function.
Non-financial risk includes some of the most material risks HSBC
Continental Europe faces, such as Technology, Cyber and Security
Risks, Data Risk, Model Risk and geopolitical risks.
All of HSBC Continental Europe's activities are monitored and
managed to be compliant with local regulations and Group standards
and procedures.
Risk governance
T he Board has ultimate supervisory responsibility for the effective
management of risk.
The Chief Risk Officer (‘CRO’), supported by members of the risk
management meeting ('RMM'), holds executive accountability for the
ongoing monitoring, assessment and management of the risk
environment and the effectiveness of the risk management
framework.
The CRO is also responsible for the oversight of reputational risk, with
the support of the Reputational Risk Committee.
Day-to-day responsibility for risk management is delegated to senior
managers with individual accountability for decision making.
HSBC Continental Europe uses a defined executive risk governance
structure to help enable appropriate oversight and accountability of
risk, which facilitates reporting and escalation to the Risk
Management Meeting.
The HSBC Continental Europe Risk Committee focuses on risk
governance and seeks to ensure a forward-looking view of risks and
their mitigation.
The Risk Committee is a committee of the Board and has
responsibility for oversight and advice to the Board in its supervision
of, amongst other things, the Bank’s risk appetite, tolerance and
strategy, systems of risk management, internal control and
compliance. Additionally, members of the Risk Committee attend
meetings of the bank’s Nomination, Remuneration and Governance
Committee at which the alignment of the reward structures to risk
appetite is considered.
In carrying out its responsibilities, the Risk Committee is closely
supported by the Chief Risk Officer, the Chief Financial Officer, the
Head of Internal Audit and the Chief Compliance Officer with other
business/functions for risks within their respective areas of
responsibility.
In addition to the role of the non-executive Risk Committee, the
HSBC Continental Europe Risk Management Meeting, is the
overarching executive management committee of both financial and
non-financial risk management.
Chaired by the Chief Risk Officer, the Risk Management Meeting met
5 times in 2025 in order to examine the major risks faced by HSBC
Continental Europe.
It reviews financial and non-financial risks for the HSBC Continental
Europe perimeter and the evolution of action plans put in place in
order to mitigate identified risks. The HSBC Continental Europe Risk
Management Meeting reports functionally to its European equivalent
in the HSBC Group and to the HSBC Continental Europe Risk
Committee and OpCo.
This framework is completed by dedicated risk forums and working
groups for specific risks in businesses and functions combining the
various levels of internal control, in order to manage, monitor and
control HSBC activities within HSBC Continental Europe.
The control framework
In compliance with the requirements of the French Order of
3 November 2014 modified on 25 February 2021 and the HSBC Group
requirements, a permanent control and risk management framework
has been established in HSBC Continental Europe.
The Chief Risk Officer and the Chief Compliance Officer of HSBC
Continental Europe are responsible for the permanent control within
HSBC Continental Europe's perimeter.
The key responsibility for control falls to the managers of the various
businesses and functions who must ensure that primary controls are
conducted in a proper manner.
Operational activities need to be covered by a second-level of
permanent control.
The HSBC Group risk taxonomy
To help ensure consistency and comparability in risk categorisation
across the Group, HSBC Continental Europe uses a standardised set
of risk types known as the HSBC risk taxonomy.
These are categorised as financial risks and non-financial risks. Non-
financial risk includes, but is not limited to, those risks captured under
the Basel definition for Operational Risk.
HSBC Continental Europe has five level 1 financial risk types and
seven level 1 non-financial risk types, as listed below:

Financial Risks | Non- Financial Risks
Treasury Risk | Financial Reporting and Tax Risk
Retail Credit Risk | Resilience Risk
Wholesale Credit Risk | Financial Crime Risk
Traded Risk | People Risk
Strategic Risk | Regulatory Compliance Risk
| Legal Risk
| Model Risk

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Risk review

Tools
In compliance with the French Order of 3 November 2014, modified
on 25 February 2021, referring to bank's permanent control system, a
framework is set up in each entity to monitor its risks.
Inherent and residual risks are assessed for each line of business,
activities and functions and are documented in an RCA (Risk and
Control Assessment) recorded in the HSBC Risk system (Helios).
Assessments are undertaken on an ongoing basis and whenever a
trigger event occurs requiring a reassessment of the risk and the
related control coverage.
The risk profile of all HSBC Continental Europe's activities is
presented formally at least annually by the First Line of Defence to
the Chief Risk Officer in attendance of the concerned Risk Stewards,
the Head of Operational and Resilience Risk function and Internal
Audit.
The objective of the exercise is to ensure that assessment and
management of non-financial risks is consistent across Businesses
and Functions and in line with the HSBC risk management framework
as well as European and French regulation.
Three lines of defence
All of HSBC Continental Europe's people are responsible for
identifying and managing risk within the scope of their roles. Roles
are defined using the three lines of defence model, which takes into
account our business and functional structures as described below.
To create a robust control environment to manage risks, HSBC
Continental Europe uses an activity-based three lines of defence
model, whereby the activity a member of staff undertakes drives
which line they reside within. This model delineates management
accountabilities and responsibilities for risk management and the
control environment.
The model underpins the bank’s approach to manage risk by clarifying
responsibility, encouraging collaboration and enabling efficient
coordination of risk and control activities.
The three lines are summarised below:
– The First Line of Defence ('1LoD') owns the risks and is responsible
for identifying, recording, reporting and managing them in line with
risk appetite, and ensuring that the right controls and assessments
are in place to mitigate them.
– The Second Line of Defence ('2LoD') challenges the First Line of
Defence on effective risk management, and provides advice and
guidance and assurance of the First Line of Defence to ensure it is
managing risk effectively.The 2LoD is independent of the risk-taking
activities undertaken by the 1LoD as defined by the Article 14 of the
French Order of 3 November 2014 modified on 25 February 2021.
The 2LoD includes Assurance teams which are dedicated to second
level of permanent control activities for all risks.
– the Third Line of Defence ('3LoD') is the Internal Audit function,
which provides independent assessment to senior management
and to the Audit Committee as to whether HSBC Continental
Europe's management, governance and internal control processes
are designed and operated effectively.
Permanent Control Activities
The permanent control activities are primarily based on first-level
controls carried out by the 1LoD composed by the Businesses,
Functions, and Global Infrastructure, which are responsible for their
day-today activities and processes, the management of the resulting
non-financial risks, and the first-level controls to mitigate those risks.
The purpose of these first-level controls is to ensure that all activities
are conducted in accordance with all internal, external and regulatory
requirements.
An independent control framework owned by the 2LoD completes
this set of first-level controls. Key roles in the independent control
framework include:
– Risk Stewards, acting as subject matter expert who set policies and
control objectives/expectations to manage risks, providing advice
and guidance to support these policies, and providing challenge and
oversight to the First LOD to ensure it is managing risk effectively.
They regularly review the Risk and Control Assessment ('RCA')
through the "Review and Challenge" module documented in the
Helios Risk Management Tool. They develop a proportionate, risk-
based assurance approach for their risk type, to independently
assess whether controls within the 1LOD are being managed
effectively and within risk appetite, and either conduct themselves
independent assurance in line with the risk-based approach or
outsource the execution of assurance to a separate assurance
provider, and provide oversight of any outsourced Assurance.
– Assurance teams acting as separate Assurance Providers,
implement and maintain an effective second level of permanent
control environment over 1LoD risks related activities. They are
responsible for developing in coordination with Risks Stewards an
annual assurance (permanent control) plan across all HSBC
Continental Europe risk types, to assess design and operating
effectiveness of key controls, to assess the completeness, accuracy
and reliability of the 1LoD RCAs, to perform independent deep dive
reviews into key risk areas aiming to assess compliance with Group
procedures and applicable regulations, to make recommendations
for process improvement, to follow up and assess the effectiveness
of corrective actions, and to report and escalate key concerns to
governance forums.
– Enterprise Risk Management in HSBC Continental Europe is a
combined risk stewardship and oversight function, which ensures
governance and management of operational risk, resilience risk and
operational resilience through the delivery and embedding of
effective frameworks, and continuous oversight and assurance of
end-to-end processes, risks and controls. The effectiveness of 1LoD
risk and control owners, and 2LoD Risk Stewards in managing non-
financial risk processes and practices is reported through Risk
Management Meeting.
– number of committees, forums and working groups that examine
the results of controls and the main deficiencies.
To comply with the American Sarbanes-Oxley law (‘SOX’), the HSBC
Group has implemented since 2006 a framework for documenting
and assessing internal controls, with regard to the processes and
operations involved in drawing up financial statements.
HSBC Continental Europe’s Finance Department is responsible for
coordinating all SOX measures and summarising their results.
Twice a year, the ‘SOX 4 Way Meeting’, chaired by the Chief Financial
Officer, reviews:
– any SOX defici encies revealed by the three lines of defence;
– the results of tests run by the Statutory Auditors; and
– action plans progress and status.
On a regular basis, HSBC Continental Europe’s Audit Committee and
the Risk Committee are informed about the results of controls carried
out for SOX compliance purposes and of progress made in the action
plans.

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Risk culture
HSBC Continental Europe’s risk culture sets the values, behaviours,
and attitudes that shape risk awareness, decision-making, and
accountability across the bank. It is an extension of its organisational
culture, guiding how the bank identifies, assesses, escalates,
mitigates, and learns from risks in line with its values: we value
difference; we succeed together; we take responsibility; and we get it
done.
Risk culture is a practical expression of the risk management
framework, embedding the shared behaviours and values into how
HSBC Continental Europe manages risks. A positive risk culture is one
that enables and rewards informed risk-taking, helping its people take
the right risks the right way. This ensures HSBC Continental Europe’s
risk management approach is not only structurally sound, but also
value-aligned and culturally embedded.
The Risk Culture Framework sets out the risk behaviours aligned to
HSBC Continental Europe’s values that describe what good looks like.
It also outlines how HSBC Continental Europe assesses, monitors and
strengthens risk culture to support long-term performance and deliver
its strategy in a responsible and sustainable way.
The Conduct Approach sets out the Conduct outcomes which
represent the positive results HSBC Continental Europe is committed
to delivering for its customers and the financial markets in which it
operates. These Conduct Outcomes shape the way the bank thinks
and acts, especially when it faces uncertainty, risk trade-offs, or
ethical dilemmas. The Conduct Approach requires that achievement
of the Conduct outcomes is factored into all risk management
processes. This helps ensure that the actions are not only within
appetite, but also fair, transparent, and aligned with the expectations
of HSBC Continental Europe’s customers, regulators, and
stakeholders.
HSBC uses clear and consistent employee communication on risk to
convey strategic messages and set the tone from senior
management and the Board. Mandatory training is also deployed on
risk and compliance topics, including conduct, to embed skills and
understanding in order to strengthen the company's risk culture and
reinforce the expected attitude to risk expected of all employees as
described in HSBC's risk policies.
Everyone involved in business with or on behalf of HSBC is required
to act with high standards of personal integrity at all times.
In 2025, HSBC Continental Europe employees continued to deepen
their knowledge and expertise on risk management through training
programmes, awareness sessions and dedicated communications.
These actions are key to ensure that all HSBC Continental Europe
teams are able to identify and understand the current challenges
against actual and emerging risks more globally such as ESG risks.
HSBC developed and implemented a Risk Culture dashboard in 2024.
It includes the most important “Culture” metrics in one dashboard
and is sourced from a variety of underlying dashboards and reports.
The metrics are aligned to particular HSBC Values and there is a focus
on “good customer outcomes” so that the impact to customers can
be considered.
The Risk Culture dashboard is reported to each Risk Management
meeting.

Key developments and risk profile
In 2025, HSBC Continental Europe continued to manage its risks
related to macroeconomic and geopolitical uncertainties and develop
risk management capabilities through the continued enhancement of
its risk management framework.
HSBC Continental Europe works to maintain and build stronger
relationships with regulators and other external stakeholders to
support its business and customer objectives.
HSBC Continental Europe retained its focus on risk transformation
and financial crime and continued to assess its operational resilience
capability while prioritising the most significant enterprise risks.
More specifically, HSBC Continental Europe sought to enhance its
risk management in the following areas:
– HSBC Continental Europe advanced its comprehensive initiative
aimed at strengthening its regulatory reporting processes and
making them more sustainable, including enhancements to data,
consistency and controls across the process. This programme is
ongoing.
– Strengthened its control environment through the continued
embedding of the Global Control Oversight function which
established a centralised approach to controls oversight across the
first line of defence business and process owners, including a
globally consistent approach to control standards, aggregated
reporting and testing.
– Enhanced its technology and cybersecurity controls to help improve
the resilience and security of its technology services in response to
the heightened external threat environment.
– Responded to new innovations in the financial system, including the
evolving use of AI through reviewing and enhancing controls across
risk areas to help us and its customers safely benefit from
innovation.
– Enhanced its processes, framework and controls to improve the
oversight of its third parties. HSBC Continental Europe has
strengthened its due diligence and monitoring capabilities, with
respect to the financial stability of its third parties to better manage
its supply chain and continues to assess and seek to manage its
operational resilience.
– The way HSBC Continental Europe identifies and manages its
climate and nature-related risks has been further enhanced. The
embeddedness across the organisation has been achieved through
risk policies and guideline updates, including the refinement of
climate and nature risk approach documents. Additionally, further
developments of risk metrics and assessment have been
undertaken to help monitor and manage exposures. A number of
climate models, as well as the nature-related model, have been
reviewed and internal climate and nature scenario analysis
capabilities have been enhanced.
– Continued to promote the whistleblowing service, HSBC
Confidential, ensuring it is fully embedded in HSBC Continental
Europe's speak-up culture. Continual enhancement is being
undertaken to ensure optimum effectiveness of the operations,
while maintaining adherence to regulation and legislation.
– Refreshed the conduct approach to ensure it remains clear,
accessible and aligned with how HSBC Continental Europe works
today, while maintaining the same strong standards and enhancing
its capability to drive positive outcomes for its customers and
protect the integrity of financial markets.

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Risk factors
HSBC Continental Europe has identified a series of risk factors that
cover the broad range of risks its businesses are exposed to. A
number of the risk factors have the potential to have a material
adverse effect on its business, prospects, financial condition, capital
position, reputation, results of operations and/or its customers. A
summary of these are presented below:

1 – Macroeconomic and geopolitical risks |  | 2 – Prudential, regulatory and legal risks to the business model of HSBC Continental Europe |  | 3 – Risks related to HSBC Continental Europe's operations |  | 4 – Risks related to HSBC Continental Europe's governance and internal control |  | 5 – Risks related to HSBC Continental Europe's business |  | 6 – Risks related to HSBC Continental Europe's financial statements
1.1 Current macroeconomic environment risk |  | 2.1 Changing regulatory and legal landscape risk |  | 3.1 Model risk |  | 4.1 Data management risk |  | 5.1 Credit quality risk |  | 6.1 Financial reporting risk
1.2 Liquidity risk |  | 2.2 Tax risk |  | 3.2 Information technology systems risk |  | 4.2 Strategy risk |  | 5.2 Counterparty credit risk |  |
1.3 Market risk |  |  |  | 3.3 Cyber-security risk |  | 4.3 Data Privacy risk |  | 5.3 Insurance risk |  |
1.4 Environmental, Social and Governance risk |  |  |  | 3.4 Third party risk |  | 4.4 Financial crime risk |  | 5.4 People risk |  |
|  |  |  |  |  | 4.5 Risk management |  |  |  |

1 Macroeconomi c and geopolitical ris ks
1.1 Economic and market conditions may adversely
affect HSBC Continental Europe’s results.
Probability: Very Likely/Impact: High (unchanged from 1H25).
HSBC Continental Europe's earnings are affected by global and local
economic, financial and geopolitical changes. Uncertain economic
conditions and volatile markets can create a challenging operating
environment for its business operations.
HSBC Continental Europe has past experience of financial and
operational losses sustained as a consequence of the economic cycle,
financial crises and wars. Its earnings, operations and operating model
have been and could in future be affected by the following factors:
– The economic cycle: Deteriorating business, consumer or investor
confidence and lower levels of investment and productivity growth,
may lead to economic recession and lower customer and client
activity. Rapid changes to the economic environment can also
create challenging operating conditions for financial institutions such
as HSBC and may affect our earnings and profits. The volatility of
US trade and tariff policies remains a key source of uncertainty.
Changes to tariff rates, including sector-specific levies, could further
disrupt trade growth and supply chains and impose additional costs
on business and households. Such policy uncertainty may also deter
businesses from hiring. During 2025, unemployment rose across
many markets, and there remains a risk of further increases if
layoffs begin to increase more significantly, employment growth
continues to be constrained by uncertainty, or if investment in
artificial intelligence (’AI’) starts to yield productivity gains that
reduce demand for labour. Slowing growth in China over the second
half of 2025 also suggests that additional economic policy support
may be needed to stimulate the domestic economy and reorientate
growth. Economic uncertainty for HSBC Continental Europe could
also be driven by the economic situations in France and Germany.
– Inflation and monetary policy: The combined pressure of tariffs,
persistent inflation and restrictive interest rates can have material
impacts on HSBC Continental Europe's customers as these factors
could erode real purchasing power and increase debt service costs.
High interest rates may affect the credit rating of its customers and
their ability to repay debt. This could negatively impact HSBC
Continental Europe's risk weighted assets (’RWAs’) and capital
position, resulting in increases in expected credit losses and other
impairment charges (’ECL’) and potential liquidity stresses due to,
amongst other factors, increased customer drawdowns. There
could be further adverse impacts on HSBC Continental Europe's
income if high rates were to result in lower lending volumes and
weaker wealth and insurance revenue. Alternatively, lowering
interest rates, while stimulating demand for new lending, may
reduce revenue from net interest margins. Major central banks,
including the US Federal Reserve, the European Central Bank and
the Bank of England (‘BoE‘), eased monetary policy during 2025 as
higher inflation risks were seen to diminish as unemployment rose.
Further monetary policy easing is expected to continue.
– Financial stability: Changing economic conditions and shifting policy
create a more uncertain and volatile environment for asset markets.
Financial markets have seen significant gains over 2025, supported
by the decline in short-term interest rates, and significant
investment in the AI and the technology sectors. AI related
investment may lead to future gains to productivity and growth, and
high equity market valuations may create a tailwind to growth by
generating positive wealth effects. However, current high valuations
raise a risk of disruptive correction, where a high valuation is later
corrected by a material reduction in such valuation. This could
adversely affect HSBC's risk profile and earnings by increasing the
financial vulnerability of customers and decreasing the value of
collateral and other claims.
– Fiscal policy and high levels of government debt: In developed
markets, government debt levels are rising due to higher social
welfare costs and increased expenditures on defense and climate
transition. Against the backdrop of weaker global growth, a high
level of public debt issuance and only limited fiscal tightening,

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borrowing costs for certain countries could increase further. This
could adversely impact the fiscal capacity and debt sustainability of
highly-indebted sovereign issuers. Emerging markets with higher
levels of US dollar-denominated debt and weaker public finances
could be further impacted by persistently high US interest rates
which could result in higher repayment costs and refinancing risks
and the possibility of sovereign rating downgrades. Where HSBC
Continental Europe has exposure to such sovereigns or related
parties, it could incur losses. At the same time, external sovereign
rating downgrades and/or a disorderly increase in long-term
government funding costs, could increase the cost of funding for
HSBC and/or limit access to market funding, resulting in an adverse
impact on interest margins and liquidity.
– Geopolitical Risk : Geopolitical risks remain high.
u For further details – see section ‘Key risk management processes’on page
162.
Adverse changes to the current economic, financial and geopolitical
situation including in relation to any of the factors listed above, could
result in:
– Idiosyncratic losses: Impairment estimates attempt to capture the
effects of economic, financial and geopolitical risks in the aggregate,
but credit losses on specific exposures, with idiosyncratic features
that make them particularly susceptible to the risks described
above, may not be fully captured in HSBC Continental Europe
estimates;
– Sector-wide impairment: Changing economic conditions, policies
and funding costs may give rise to a deterioration in specific
industries and sectors. Certain sectors in various countries may be
targeted by material increases in trade tariffs, with industry wide
implications;
– Reduced credit demand: The demand for borrowing from
creditworthy customers may diminish during periods of recession or
where economic activity slows or remains subdued.
– A tightening of financial market conditions: HSBC Continental
Europe's ability to borrow from other financial institutions or to
engage in funding transactions may be adversely affected by market
disruption; and
– Goodwill and intangibles: A changing economic and geopolitical
outlook may change the recoverable value of assets and necessitate
a write down in the value of intangible balance sheet items such as
goodwill.
Provisioning against credit loss is conducted under the IFRS 9
‘Financial Instruments’ (IFRS 9) calculations of expected credit losses
('ECL'), which uses forward looking scenarios that incorporate the
economic and financial risks detailed above.
u For further details concerning HSBC Continental Europe's economic
scenarios including the Central Scenario – see section ‘Measurement
uncertainty and sensitivity analysis of ECL estimates’ on page 148.
Forecasts remain uncertain, and changing economic conditions and
the materialisation of key risks could reduce the accuracy of the
Central scenario. Forecasts in recent years have been sensitive to
changing economic and financial policy, changing supply chain
conditions, monetary policy expectations and the inflation outlook.
There is also uncertainty regarding the adequacy of HSBC Continental
Europe's models to reflect credit losses under emerging risks which
are not captured under the historical loss experience of our models, or
to adequately distinguish risks for specific sectors or portfolios. The
financial model outputs continue to be monitored and management
judgemental adjustments are used where modelled ECL does not
fully reflect the identified risks and related uncertainty, or to
capture significant late-breaking events. Nevertheless, model outputs
may fail to accurately capture the effects of complex economic,
financial and geopolitical risks.
u For further details – see also Risk Factor 3.1 – ‘H SBC Continental Europe
could incur losses or be required to hold additional capital as a result of
model limitations or weaknesses‘ for additional details on how models have
been impacted by higher inflation and interest rates.
HSBC Continental Europe continually assesses the impact of
geopolitical and macroeconomic events.
u For further details – see also sections ‘Economic background’ on page 8 and
‘Economic outlook’ on page 8.
Significant uncertainties remain in assessing the duration and impact
of the current macroeconomic environment.
1.2 Liquidity, or ready access to funds, is essential to its
businesses.
Probability: Unlikely/Impact: High (unchanged from 1H25).
HSBC Continental Europe's ability to borrow on a secured or
unsecured basis, and the cost of doing so, can be affected by
increases in interest rates or credit spreads, the availability of credit,
regulatory requirements relating to liquidity or the market perceptions
of risk relating to the wider HSBC Group, HSBC Continental Europe
specifically or the banking sector, including our perceived or actual
creditworthiness.
Current accounts and savings deposits payable on demand or at short
notice form a significant part of the Bank's funding and HSBC
Continental Europe places considerable importance on maintaining
their stability. For deposits, stability depends upon preserving investor
confidence in HSBC Continental Europe’s capital strength and
liquidity, and on comparable and transparent pricing.
Deposits have historically been a stable source of funding, even in
times of economic crisis, but under an extreme scenario this may not
be the case.
HSBC Continental Europe also accesses wholesale markets in order
to secure funding to align asset and liability balances, maturities and
currencies, and to contribute to the financing of its lending and market
activities.
An inability to obtain financing in the unsecured long-term or short-
term debt capital markets, or to access the secured lending markets,
could have a material adverse effect on our liquidity.
Non-favourable macroeconomic developments, market disruptions or
regulatory developments may increase the funding costs or challenge
the ability of HSBC Continental Europe to raise funds to support or
expand its businesses.
If the Bank were unable to raise funds through deposits and/or in the
capital markets, its liquidity position could be adversely affected. In
such an extreme scenario, it could be unable to meet deposit
withdrawals on demand or at their contractual maturity, to repay
maturing debt, or to meet its obligations under committed financing
facilities and insurance contracts or to fund new loans or investments.
The Bank may need to liquidate unencumbered assets to meet its
liabilities.
In a time of reduced liquidity, HSBC Continental Europe may be
unable to sell some of its assets, or it may need to sell assets at
reduced prices, which in either case could materially adversely affect
its business, prospects, financial condition, capital position and results
of operations. It is difficult to predict with any degree of accuracy

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changes in access to funds, and the extent of the potential
consequences.
Nevertheless, a number of mitigating actions and procedures –
including business actions and participation in the central bank
refinancing operations are in place in HSBC Continental Europe,
through its Recovery Plan in order to address a potential liquidity
crisis.
HSBC Continental Europe undertakes internal liquidity stress testing
to supplement the regulatory Liquidity Coverage Ratio scenario to test
if its risk appetite is adequate, and to validate that it can continue to
operate under various stress scenarios that involve an analysis of the
relevant probable or severe area of risk to HSBC Continental Europe.
HSBC Continental Europe continues to rely on its daily internal
liquidity stress test metrics, complementing the regulatory Liquidity
Coverage Ratio (‘LCR’), for the operational day-to-day management of
the Bank’s liquidity position. The assumptions and results of these
internal stress tests are reviewed by the Asset, Liability, and Capital
Management Committee (‘ALCO’) and presented through the Internal
Liquidity Adequacy Assessment Process to the Board.
1.3 Market fluctuations may reduce HSBC Continental Europe's
income or the value of its portfolios.
Probability: Likely/Impact: Medium (unchanged from 1H25).
HSBC Continental Europe businesses are inherently subject to risks in
financial markets and in the wider economy, including changes in, and
increased volatility of, interest rates, inflation rates, credit spreads,
foreign exchange rates, equity and bond prices, and the risk that
customers act inconsistently with HSBC Continental Europe's
business, pricing, and hedging assumptions.
Market pricing can be volatile and ongoing market movements could
significantly affect a number of key areas. For example, banking and
trading activities are subject to interest rate risk, foreign exchange
risk, inflation risk and credit spread risk.
Changes in interest rate levels, interbank spreads over official rates
and yield curves affect the interest rate spread realised between
lending and borrowing costs. The risks of market volatility or changes
in margin levels remain high.
Competitive pressures on fixed rates or product terms for existing
loans and deposits may restrict HSBC Continental Europe's ability to
change interest rates to its customers in response to changes in
wholesale market rates.
HSBC Continental Europe’s insurance business in Malta is exposed to
the risk that market fluctuations may cause mismatches to occur
between product liabilities and the investment assets that back them.
Market risks can affect its insurance products in a number of ways
depending upon the product and associated contract. For example,
mismatches between assets and liability yields and maturities give
rise to interest rate risk. Some of these risks are borne directly by the
customer and some are borne by the insurance business, with their
excess capital invested in the markets. Moreover, some insurance
contracts involve guarantees and options that increase in value in
adverse investment markets. There is a risk that the insurance
business could bear some of the cost of such guarantees and options.
The performance of the investment markets could thus have a direct
effect upon the value embedded in the insurance and investment
contracts and its operating results, financial condition and prospects.
u For further details – see also section ’Market risk in 2025’ on page 162.
As at 31 December 2025, Market Risk RWAs were EUR 3.95 billion.
u For further details – see Market Risk tables in the HSBC Continental Europe
Pillar 3 document.
1.4 HSBC Continental Europe is subject to financial and non-
financial risks associated with Environmental, Social and
Governance ('ESG') related matters, such as climate change,
nature-related risk, and human rights issue s.
Probability: Likely/Impact: Medium (unchanged from 1H25).
ESG related matters such as climate change, society’s impact on
nature and human rights issues bring risks to HSBC Continental
Europe’s business and customers in addition to the wider society.
HSBC Continental Europe is subject to financial and non-financial risks
associated with ESG-related matters, such as climate change, nature-
related and human rights issues. These matters can impact the Bank
both directly and indirectly through its business activities and
relationships.
Credit risk and trading losses, liquidity impacts and/or impacts to real
estate portfolio may be faced if climate and environmental -related
regulatory, legislative or technological developments impact
customers’ business models or if extreme weather events disrupt or
interrupt operations, resulting in financial difficulty for customers and/
or stranded assets, and impacting their ability to repay their debt or
secure insurance Clients may find that their business models fail to
align to a net zero economy or face disruption to their operations or
deterioration to their assets as a result of extreme weather or
ecosystem services degradation.
Operational risk may also increase if extreme weather events impact
critical operations and premises.
Regulatory compliance, legal, conduct and reputational risks may
result from the increasing pace, breadth and depth of climate and
nature-related regulatory expectations, including on the management
of climate and nature risks, and variations in external ESG-related
reporting standards and taxonomies, requiring implementation in
short timeframes.
Such risks may also arise from how the Bank decides to support its
customers in high-emitting sectors in their transition to net zero, the
preferences of different stakeholders in relation to the HSBC Group
approach to the transition to net zero, and if insufficient progresses is
made in achieving HSBC Group ESG-related ambitions, targets and
commitments.
Additional risks may be faced if the Bank knowingly or unknowingly
makes inaccurate, unclear, misleading, or unsubstantiated claims
regarding sustainability to its stakeholders.
Financial reporting risks concerning HSBC Continental Europe climate
and ESG disclosures may be encountered due to model limitations
and the limited quality and consistency of available data. This situation
poses a risk of relying on incomplete or inaccurate data and models,
potentially leading to sub-optimal decision-making. As methodologies,
data, scenarios, and industry standards evolve with market practices,
regulations, or scientific advancements, the Bank ability to collect and
process required data may be challenged, exposing HSBC Continental
Europe to financial reporting risk in relation to its ESG disclosures.
Such developments could also necessitate revisions to its internal
measurement frameworks and reported data, including on financed
emissions, making year-on-year comparisons difficult. This could
result in the Group having to re-evaluate its progress towards its ESG-

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related ambitions, targets and commitments in the future, resulting in
reputational, regulatory compliance and legal risks.
Beyond climate change and nature-related risks, human rights risk is
identified as one of the primary drivers of social risk. Businesses are
expected to be transparent about their efforts to identify and respond
to the risk of adverse human rights impacts arising from their
business activities and relationships. Failure to manage this risk may
negatively impact people and communities, which in turn may result
in reputational, regulatory compliance and legal risks for HSBC
Continental Europe.
If any of the above risks materialise, this could have financial and non-
financial impacts for HSBC Continental Europe which could, in turn,
have a material adverse effect on its business, financial condition,
results of operations, reputation, prospects, and strategy.

2 Prudential, regulatory and
legal risks to the business model
of HSBC Continental Europe
2.1 HSBC Continental Europe is subject to numerous new and
existing legislative and regulatory requirements, and the
risk of failure to comply with applicable regulations at least
temporarily.
Probability: Very Likely/Impact: High (unchanged from 1H25).
HSBC Continental Europe’s businesses are subject to ongoing
regulation, policies, voluntary codes of practice and interpretations in
the various markets in which it operates.
A number of regulatory changes affecting the HSBC Group have
effects beyond the country in which they are enacted. Increased
fragmentation in regulatory requirements may limit the Group's ability
to implement globally consistent standards in response to regulatory
change.
The areas where regulatory changes and increased supervisory
expectations could have a material adverse effect on HSBC
Continental Europe's business, financial condition, results of
operations, prospects, capital position, reputation and strategy
include, but are not limited to, those listed below, grouped around
prudential and non-prudential themes.
Prudential and related issues
In recent years, regulators and governments have focused on
reforming both the prudential regulation of the financial services
industry and the ways in which the business of financial services is
conducted. The measures taken include enhanced capital, liquidity
and funding requirements, the separation or prohibition of certain
activities by banks, changes in the operation of capital markets
activities, the introduction of tax levies and transaction taxes and
changes in compensation practices. Specific examples of such
measures and initiatives include:
– Implementation of Basel 3.1, which includes changes to the RWA
approaches to credit risk, market risk, operational risk, counterparty
risk and credit valuation adjustments, and the application of an RWA
output floor;
– Increased supervisory expectations arising from expanding and
increasingly complex regulatory reporting obligations, including
expectations on data integrity and associated governance and
controls. To address these expectations, HSBC Continental Europe
has advanced a programme aimed at strengthening its regulatory
reporting processes and making them more sustainable. This
programme includes enhancing data, consistency and controls;
– Financial effects of climate risk and other ESG-related changes
being incorporated within the global prudential framework,
including physical risks from climate change and the transition risks
resulting from a shift to a low ca rbon econo my;
– Heightened supervisory concerns regarding the growth of private
markets and their interconnection with banks.
Non-prudential and related issues
With regard to the non-financial risk agenda, there is a focus on
business practices (including customers and markets), operational and
cyber resilience, AI, digital and technology changes, ESG, payments
and financial crime, including:
– Continued focus by regulators, international bodies and
policymakers on banks' business practices. This includes ensuring
fair outcomes for customers, fostering effective competition and
maintaining the orderly and transparent functioning of global
financial markets. HSBC Continental Europe also continues to focus
on employee culture and behaviour, whistleblowing, and inclusion;
– High regulatory expectations and requirements relating to various
aspects of operational and cyber resilience, and third-party risks,
including an ongoing focus on the response of institutions to
operational disruptions, including those arising out of the application
of the EU’s Digital Operational Resilience Act (‘DORA’), which came
into effect in January 2025;
– Regulatory expectations and requirements around the use of AI,
including in connection with the implementation of the EU’s AI Act;
– The supervisory and regulatory focus on technology adoption and
digital delivery, underpinned by customer protection, including in
respect of the use of digital assets and currencies and wider
financial technology risks.
– Compliance with existing and future ESG-related risk management
and disclosure requirements applicable to banks and businesses
more generally, particularly those relating to climate change,
transition plans, greenwashing and supply chain due diligence (such
as the proposed amendments to the EU’s Sustainable Finance
Disclosure Regulation (‘SFDR’) and proposed changes to the
Corporate Sustainability Reporting Directive (‘CSRD’) and the
Corporate Sustainability Due Diligence Directive (‘CSDD’) in the EU.
– Continuing supervisory and regulatory change globally on payment
services and related infrastructure, including future changes in the
EU as a result of the EU’s Third Payment Services Directive (‘PSD3’)
and an accompanying Payment Services Regulation, which are
expected to come into force in 2026; and
– The ongoing expectations with respect to managing emerging
financial crime risks and their impact on customers, managing
conflicting laws and approaches to legal and regulatory regimes, and
implementing increasingly complex sanctions and trade restrictions.
2.2 HSBC Continental Europe, its branches and its subsidiaries
are subject to tax-related risks in the countries in which they
are established.
Probability: Likely/Impact: Medium (unchanged from 1H25).
HSBC Continental Europe, its branches and its subsidiaries are
subject to the substance and interpretation of tax laws in all countries

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in which they are established and therefore are subject to routine
reviews and audits by tax authorities in relation thereto.
The Bank’s interpretation or application of these tax laws may differ
from those of the relevant tax authorities. HSBC Continental Europe,
its branches and its subsidiaries record provisions for potential tax
liabilities that may arise based on the amounts expected to be paid to
the tax authorities. The amounts ultimately paid may differ materially
from the amounts set aside in such provisions depending on the
ultimate resolution of such matters.
Due to major restructuring and notably business reorganisation over
recent years, transfer pricing risk has increased for the bank. In that
respect, HSBC Continental Europe ensures compliance with the
relevant transfer pricing rules in each location to mitigate the tax risk.
However, transfer pricing remains a subject of particular focus by the
tax authorities highlighted by the recent reforms which will further
strengthen the tax authorities’ powers. This requires monitoring in
view of the practice of the tax authorities to systematically verify the
principles applied by international groups carrying out intra-group
transactions.
Since 2023, the French National Financial Prosecutor (‘PNF’) had been
investigating HSBC Continental Europe and the Paris branch of HSBC
Bank plc, in connection with alleged tax fraud related to the dividend
withholding tax treatment of certain trading activities. In January
2026, HSBC Bank plc reached an agreement with the PNF to resolve
its investigation. HSBC Bank plc paid a total of €302m and this matter
is now closed. The investigation into HSBC Continental Europe was
closed with no further action.
HSBC Bank plc and the German branch of HSBC Continental Europe
continue to cooperate with investigations by the German public
prosecutor into numerous financial institutions and their employees,
in connection with the dividend withholding tax treatment of certain
trading activities.
Based on the facts currently known, it is not practicable at this time
for HSBC to predict the resolution of this matter, including the timing
or any possible impact on HSBC, which could be significant.
u For further details – see Note 33 (section Tax-related investigations) on page
253.
HSBC Continental Europe continues to monitor recent developments
in the French tax law to ensure it remains compliant and has
continued to strengthen its internal controls.
It is also worth noting that tax rules are becoming increasingly
complex and continue to evolve. Changes to international tax rules
potentially create additional risks for all banks including HSBC
Continental Europe.
On 20 June 2023, legislation was substantively enacted in the UK, the
jurisdiction of HSBC Continental Europe’s ultimate parent entity,
HSBC Holdings plc, to introduce the ‘Pillar Two’ global minimum tax
model rules of the OECD’s Inclusive Framework on Base Erosion and
Profit Shifting (‘BEPS’), with effect from 1 January 2024. At the year-
end 2023, legislation was also enacted in France to implement the
model rules, as well as a qualified domestic minimum top-up tax, with
effect from 1 January 2024. Similar rules have been also enacted
across Continental Europe, and notably in the locations where HSBC
Continental Europe operates.
Under these rules, a top-up tax liability arises where the effective tax
rate of the Group’s operations in France, calculated based on
principles set out in the OECD’s Pillar Two model rules, is below 15
per cent.
Based on the outlook for 31 December 2025, HSBC Continental
Europe in France is loss-making and should meet the transitional safe
harbour test, as such no top-up tax is expected. Ireland has an
effective tax rate below the minimum level of taxation of 15 per cent
and the forecasted tax impact is EUR 2.9 million (USD 3.3 million).

3 Risks related to HSBC Continental
Europe's operations
3.1 HSBC Continental Europe could incur losses or be required
to hold additional capital as a result of model limitations or
weaknesses.
Probability: Very Likely/Impact: High (unchanged from 1H25).
HSBC Continental Europe uses models for a range of purposes in
managing its business, including regulatory capital calculations,
financial reporting, calculation of ECLs on an IFRS 9 basis, credit
approvals, stress testing, treasury management, financial crime and
fraud risk management.
HSBC could face adverse consequences as a result of decisions that
may lead to actions by management based on models that are poorly
developed, implemented or used, or as a result of the modelled
outcome being misunderstood or the use of such information for
purposes for which it was not designed or by limitations arising from
the uncertainty inherent in predicting or estimating future outcomes.
Risks arising from the use of models could have a material adverse
effect on HSBC Continental Europe’s business, financial condition,
results of operations, prospects, capital position and reputation.
Regulatory scrutiny and supervisory concerns over banks’ use of
models are considerable, particularly the internal models used in the
calculation of regulatory capital. If regulatory approval for key capital
models is not achieved in a timely manner or if those models are
subject to negative feedback from regulators, HSBC Continental
Europe could be required to hold additional capital.
Model risk remains a key area of focus given the regulatory scrutiny in
this area.
IFRS 9 models may generate outputs that do not accurately assess
the actual level of credit quality in all cases. In order to calculate more
realistic valuation of assets, compensating controls, such as post
model management adjustments based on expert judgement may be
required. Such compensating controls require a significant degree of
management judgment and assumptions. There is a risk that future
actual results may differ from such judgments and assumptions.
Longer term, the models are likely to require redevelopment to
consider the effects of changes in rates and financial markets.
u For further details concerning risk weighted assets as at 31 December
2025, refer to ‘Overview of risk weighted exposure amounts’ in the HSBC
Continental Europe Pillar 3 document. These numbers are for a large part
computed using internal models.
Likewise, models are used to infer the fair value of some financial
instruments, such as over-the-counter derivatives (‘OTC’), whose
price cannot be directly observed on trading platforms: in these cases,
models compute a fair value by leveraging the prices of similar
observable financial instruments.
These may be based on observable inputs only (‘Level 2’ fair value
accounting) or, in some cases, on some unobservable inputs that
have to be prudently estimated (‘Level 3’ fair value accounting).
u For further details concerning fair values of financial instruments carried at
fair value as at 31 December 2025, refer to Note 13 on page 229.

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The adoption of more sophisticated modelling approaches including
artificial intelligence by both HSBC Continental Europe and the
financial services industry could also lead to increased model risk that
will have to be managed in compliance with the EU AI Act.
HSBC Continental Europe’s commitment to changes to business
activities due to climate and sustainability challenges have an impact
on model risk. Models play an important role in risk management and
financial reporting of climate related risks. Climate risk modelling
poses specific challenges, such as uncertainty of the long-dated
impacts of climate change and lack of robust and high-quality climate
related data.
3.2 HSBC Continental Europe’s operations are highly dependent
on its information technology systems.
Probability: Likely/Impact: High (unchanged from 1H25).
HSBC Continental Europe operates in an extensive and complex
technology landscape, which must remain resilient in order to support
customers, the Group and markets globally. Risks arise where
technology is not understood, maintained, or developed appropriately.
The reliability and security of HSBC Continental Europe’s information
technology infrastructure is crucial to the bank's operations and the
provision of financial services to its customers and protecting the
HSBC brand.
The effective functioning of HSBC Continental Europe’s payment
systems, financial control, risk management, credit analysis and
reporting, accounting, customer service and other information
technology systems, as well as the communication networks with the
main data processing centres, are important to HSBC Continental
Europe’s operations.
Critical system failure, extended service unavailability or a material
breach of data security, particularly of confidential customer data,
could compromise HSBC Continental Europe’s ability to serve its
customers. This could lead to breaches of regulations and could cause
long-term damage to its business and brand that could have a material
adverse effect on its business, financial condition, results of
operations, prospects and reputation.
In 2025, 6 IT incidents (including incidents with third parties) were
reported to local regulators following the revised incident
management process aligned to the DORA requirements which came
into effect in January 2025.
u For further details – see also Risk Factor: HSBC Continental Europe’s
operations use third party and intra-Group suppliers and service providers.
HSBC is continuing to invest in strengthening the resilience of its
technology infrastructure and the further alignment of IT systems
across HSBC Continental Europe, ensuring an appropriate and
consistent control environment across the IT landscape.
There was a net operational loss of EUR0.14 million related to
information technology in 2025 (EUR 0.0 million in 2024).
3.3 HSBC Continental Europe remains susceptible to a wide
range of cyber security risks that impact and/or are
facilitated by technology.
Probability: Likely/Impact: High (unchanged from 1H25).
The threat of cyber incidents remains a concern for HSBC Continental
Europe, as it does across the financial sector and other industries. As
cyber-threats continue to evolve, failure to protect HSBC Continental
Europe’s operations may result in disruption for its customers, and its
business, cause financial loss or loss of sensitive data. This could
have a negative impact on the bank’s customers, and its own
reputation, among other risks.
Adversaries attempt to achieve their objectives by compromising
HSBC and related third party systems. They use techniques that
include malware (including ransomware), exploitation of both known
and unpublished (zero-day) vulnerabilities in software, phishing emails,
distributed denial of service, as well as potentially physical
compromise of premises, or coercion of staff. Customers may also be
subject to these constantly evolving cyber-attack techniques. HSBC
Continental Europe, like other financial institutions, experiences
numerous attempts to compromise its cyber security.
Cyber security risks will continue to increase, due to continued
increase of services delivered over the internet; increasing reliance on
internet-based products, applications and data storage; and an
increased use of hybrid working models by HSBC’s employees,
contractors, third party service providers and their sub-contractors.
A failure in HSBC’s adherence to its cyber security policies,
procedures or controls, employee wrongdoing, or human, governance
or technological error could also compromise HSBC Continental
Europe’s ability to defend against cyber-attacks. Should any of these
cyber security risks materialise, they could have a material adverse
effect on its customers, business, financial condition, results of
operations, prospects and reputation.
There have been no material cyber-related breaches that impacted
HSBC Continental Europe customers or operations in 2025 due to
controls in place despite numerous attacks being observed on a daily
basis. However, the risk remains that future cyber-related attacks,
either directly or via one of its suppliers, could have a material adverse
effect on HSBC Continental Europe's business, financial condition,
results of operations, prospects and reputation.
3.4 HSBC Continental Europe’s operations use third party and
intra-Group suppliers and service providers.
Probability: Likely/Impact: Medium (unchanged from 1H25).
In line with HSBC Continental Europe’s outsourcing and Information
and Communication Technology ('ICT') Third Party risk strategy, there
is reliance on external and intra-Group third parties to supply goods
and services. The activities outsourced are diverse and relate, for
example, to reporting, risk management and securities custody. The
CIB COO organisation is supporting the Global Businesses and Global
Functions' operations and technology infrastructure and has the
highest number of material outsourced services, mainly intra-Group
services. Internal service providers are located on different continents
which helps ensure business continuity between the different
locations. Among the branches and subsidiaries of HSBC Continental
Europe, France (including the French subsidiaries) is the country that
outsources the most material services, followed by Malta and
Luxembourg.
The use of third-party suppliers and service providers by financial
institutions is a particular focus of the regulators. This includes how
outsourcing decisions are made, how key relationships are managed
and our understanding of third-party dependencies and their impact
on service provision.
Risks arising from the use of third parties and from supply chains,
such as risks related to operational incidents, financial stability, cyber-
attacks and geopolitical tension are particularly important and
challenging to manage. The threat of cyber-attacks on our providers
and supply chain remains a concern for HSBC Continental Europe, as
it does across the entire financial sector as cyber events may result in
disruption for customers or impact the data shared.

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The inadequate management of third party risk could impact HSBC
Continental Europe's ability to meet strategic, regulatory and client
expectations. This may lead to a range of impacts, including
regulatory censure, penalties or damage both to shareholder value
and to HSBC Continental Europe’s reputation. Any outsourcing of a
material service needs to be validated in the HSBC Continental
Europe Risk Management Meeting and then notified to regulators.
In 2025, HSBC Continental Europe continued to enhance its Third-
Party Management and Global Register systems.
In terms of regulatory change, HSBC Continental Europe successfully
implemented the Digital Operational Resilience Act ('DORA')covering
the Register of Information (‘ROI’), ICT determination, Important
Business Service Mapping (‘IBS’), materiality and risk assessments.
HSBC Continental Europe also enhanced its processes, framework
and controls to improve the oversight of its third parties and has
strengthened its due diligence and monitoring capabilities, with
respect to the financial stability of its third parties to better manage its
supply chain. HSBC Continental Europe continues to assess and seek
to manage its operational resilience.

4 Risks related to HSBC Continental
E urope's governance and int ernal
control
4.1 HSBC data management may not be robust enough to
support the increasing data volume and evolving
regulations.
Probability: Very Likely/Impact: High (unchanged from 1H25).
As HSBC Continental Europe has become more data-driven and its
business processes moved to digital channels, the volume of data
that the bank relies on has increased.
As a result, management of data (including data retention and
deletion, data quality, data privacy and data architecture) from creation
to destruction must be robust and designed to identify quality and
availability issues.
Inadequate data management could result in negative impacts to
customer service, business processes, or require manual intervention
to reduce the risk of errors in reporting to senior management,
executives or regulators. This could have a material adverse effect on
the Bank’s business, prospects, financial results and reputation.
HSBC Continental Europe did not suffer any significant data-related
incidents linked to increasing data volumes or evolving regulations in
2025.
Over recent years, the regulatory expectations related to data
management and data architecture have increased considerably,
primarily driven by by BCBS 239. The objective of BCBS 239 is to
enhance the risk management and decision-making processes at
banks for effective risk data aggregation and reporting.
4.2 The delivery of HSBC Continental Europe's strategy is
subject to execution risk.
Probability: Likely/Impact: High (unchanged from 1H25).
Effective management of transformation projects is required to
deliver the Group’s strategic priorities; both externally driven
programmes and key business initiatives to deliver growth,
operational resilience and efficiency outcomes.
The scale, complexity and, at times, concurrent demands of the
projects required to meet these can result in heightened execution
risk.
HSBC Continental Europe has a clear and focused strategy that is
consistent with the HSBC Group’s strategy.
u For further details – see ‘HSBC strategy implemented in Continental Europe'
on page 6.
Within this framework, the strategy in Continental Europe is to focus
on customers that value the HSBC network, leveraging its strengths
in transaction banking, trade, capital markets and financing and
increasing the cross-business and synergies between the HSBC
Group’s different entities across the globe, while ensuring an efficient
operating model across HSBC Continental Europe’s operations.
HSBC Continental Europe continues to adapt its operating model,
implementing a number of programmes in support of the activities of
HSBC Continental Europe while ensuring compliance with regulatory
requirements.
The development and implementation of HSBC Continental Europe’s
strategy requires difficult, subjective and complex judgements,
including forecasts of economic conditions in Continental Europe but
also in other parts of the world. HSBC Continental Europe may fail to
correctly identify the relevant factors in making decisions as to capital
deployment and cost reduction.
HSBC Continental Europe may also encounter unpredictable changes
in the external environment that are unfavourable to its strategy. The
bank’s ability to execute strategic change may be limited by its
operational capacity, effectiveness of its change management
controls and instituting and maintaining appropriate transitional
arrangements and the potential for unforeseen changes in the market
and/or regulatory environment in which it operates.
Robust management of critical time-sensitive and resource intensive
projects is required to effectively deliver HSBC Continental Europe’s
strategic priorities. The cumulative impact of the collective change
initiatives in progress within HSBC Continental Europe has been
significant and has had a direct impact on HSBC Continental Europe’s
employees.
The global economic outlook also continues to remain uncertain.
Therefore, there remains a risk that, in the absence of an
improvement in economic conditions, HSBC Continental Europe’s
cost and investment actions may not be sufficient to achieve the
expected benefits.
The failure to successfully deliver or achieve the expected benefits of
the HSBC Continental Europe’s key strategic initiatives could have a
material adverse effect on its customers, the business it undertakes,
financial results and future prospects, operational resilience and
reputation.
Execution risk linked to ongoing projects is being managed and
tracked by a dedicated committee.

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4.3 The increasing volume of personal data processing activities
and of cross-border data transfers may lead to significant
data privacy breaches.
Probability: Likely/Impact: Medium (unchanged from 1H25).
HSBC Continental Europe‘s businesses and functions rely on the
processing of a large volume of personal data. These data are
increasingly processed in non-EU jurisdictions so as to fulfil
operational requirements.
Whilst the offshoring of personal data processing activities has
notable benefits, it also considerably increases the risk that the
personal data in question will be processed in a manner which is
incompatible with the high standards imposed by GDPR and the
Schrems II ruling.
Whilst no significant incident relating to cross-border personal data
processing activities occurred in 2025, the Schrems II and GDPR risks
remain topical in 2026.
Failure to comply with data privacy laws and other legislation in the
jurisdictions in which HSBC Continental Europe operates may result in
regulatory sanctions. Any of these failures could have a material
adverse effect on its business, financial condition, results of
operations, prospects, and reputation.
4.4 HSBC Continental Europe is subject to the risk of financial
crime and third parties may use the bank as a conduit for
illegal activities without its knowledge
Probability: Likely/Impact: Medium (unchanged from 1H25).
Financial crime risk is the risk that HSBC’s products and services will
be exploited for criminal activity. This includes fraud, bribery and
corruption, tax evasion, sanctions and export control violations,
money laundering, terrorist financing and proliferation financing.
Financial crime risk arises from day-to-day banking operations
involving customers, third parties and employees.
Financial institutions remain under considerable regulatory scrutiny
regarding their ability to detect and prevent financial crime as we
operate in an ever-changing environment due to increasingly complex
geopolitical tensions and macroeconomic factors as well as, evolving
international financial crime regulations. Within the European Union,
HSBC is actively monitoring the Regulatory changes with the
implementation of the EU AML Regulation in 2027. In addition, the
accessibility and increasing sophistication of generative AI brings
financial crime risks. While there is potential for the technology to
support financial crime detection, there is also a risk that criminals use
generative AI to perpetrate fraud, particularly scams.
HSBC Continental Europe’s ability to manage financial crime risk is
dependent on the use and effectiveness of its financial crime risk
assessments, systems and controls. Weak or ineffective financial
crime processes and controls may risk HSBC inadvertently facilitating
financial crime which may result in regulatory investigation, sanction,
litigation, fines and reputational damage.
HSBC Continental Europe is required to comply with applicable
financial crime laws and regulations, and has adopted various
Financial Crime policies, procedures and controls aimed at preventing
the exploitation of HSBC's products and services for criminal activity.
Furthermore, annual Global financial crime mandatory training is
provided to all colleagues in HSBC Continental Europe, with additional
targeted training tailored to certain individuals.
HSBC Continental Europe continues to make progress with several
key financial crime risk management initiatives such as with the
deployment of our intelligence-led, dynamic risk assessment
(capability for customer account monitoring replacing rule based
monitoring). Over 2024-2025 deployments have been completed for
France, Malta, Spain, Ireland and Poland. The Bank is also deploying a
next generation capability to increase monitoring coverage of
correspondent banking type activity with successful deployments
completed in France, Poland, Spain, Ireland, Malta, the Netherlands
and Luxembourg.
HSBC Continental Europe remains focused on embedding these new
tools and processes to be operationally effective with an ambition to
decrease the time to detect potential risks.
Sanctions and trade restrictions are complex. In particular the
significant sanctions and trade restrictions against Russia. In
December 2023, the US established a new secondary sanctions
regime, providing itself broad discretion to impose severe sanctions
on non-US banks that are knowingly or even unknowingly engaged in
certain transactions or services involving Russia’s military-industrial
base. This creates challenges associated with the detection or
prevention of third-party activities beyond HSBC’s control. The
imposition of such sanctions against any non-US HSBC entity could
result in significant adverse commercial, operational and reputational
consequences for HSBC. Lastly, in terms of internal control
enhancements, HSBC Continental Europe has been making process
improvements to list management and alert adjudication as these are
integral to managing the rapidly changing Sanctions and trade
restrictions environment.
u For further details concerning tax related investigations – see Note 33
(section Tax-related investigations).
4.5 HSBC Continental Europe's risk management measures may
not be successful.
Probability: Likely/Impact: Medium (unchanged from 1H25).
Risk management is an integral part of HSBC Continental Europe’s
activities. Risk represents the exposure to uncertainty and the
resulting variability of return. Specifically, risk equates to the adverse
effect on profitability or financial condition arising from different
sources of uncertainty, including but non exhaustively credit risk,
market risk, non-traded market risk, operational risk, insurance risk,
concentration risk, liquidity and funding risk, litigation risk, reputational
risk, strategic risk, pension risk and regulatory risk.
To manage its risks, HSBC Continental Europe uses a range of risk
tools amongst which:
– T he Risk Map is an integrated risk management tool used to assess,
monitor and report the current risk profile, including the qualitative
statements, Risk Drivers and Top Risks of the Bank. It provides a
point-in-time view of the enterprise-wide risk profile across both
financial and non-financial risks against the risk appetite approved by
the Board. The qualitative statements set out the top-level
description of the Bank’s appetite for specific risk types, that define
the residual risk the Bank is comfortable or accept taking to achieve
strategic aims and the residual risk that cannot be tolerated. A Risk
Driver is an issue or event that may cause risk to be outside of
appetite and a Top Risk is a Risk Driver that the Bank is managing,
which if not managed and mitigated has the potential to have a
material impact. Thematic Issues are broad, overarching material

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matters that are driven by either internal (e.g. internal operating
environment) or external; (macroeconomic factors/regulatory
demands) events or trends. They typically span multiple Level 1 risk
categories; and
– The Risk Appetite Statement.
u For further details concerning the Risk Appetite Statement - see section
"HSBC Continental Europe's risk appetite" on page 124.
Whilst HSBC Continental Europe employs a broad and diversified set
of risk monitoring and mitigation techniques, such methods and the
judgements that accompany their application cannot anticipate every
unfavourable event or the specifics and timing of every outcome.
Failure to manage risks appropriately could have a material adverse
effect on the businesses, financial condition, results of operations,
prospects, capital position, strategy and reputation of the bank.

5 Risks related to HSBC Continental
Europe's business
5.1 Risks concerning borrower credit quality are inherent in
HSBC Continental Europe's businesses.
Probability: Likely/Impact: High (unchanged from 1H25)).
Risks arising from changes in credit quality and the recoverability of
loans and amounts due from borrowers and counterparties (e.g.
reinsurers and counterparties in derivative transactions) are inherent
in a wide range of HSBC Continental Europe's businesses.
Adverse changes in the credit quality of HSBC Continental Europe's
borrowers and counterparties arising from a general deterioration in
economic conditions or systemic risks in the financial systems could
reduce the recoverability and value of HSBC Continental Europe's
assets, and result in increased credit losses.
HSBC Continental Europe estimates and recognises ECLs in its credit
exposure. This process, which is critical to HSBC Continental
Europe's results and financial condition, requires difficult, subjective
and complex judgements, including forecasts of how the economic
and geopolitical conditions, including the impact of sanctions and
tariffs, and sector specific risks, might impair the ability of its
borrowers to repay their loans and the ability of other counterparties
to meet their obligations.
This assessment considers multiple alternative forward-looking
economic conditions (including Gross Domestic Product estimates)
and incorporates this into the ECL estimates to meet the
measurement objective of IFRS 9.
As is the case with any such assessments, HSBC Continental Europe
may fail to estimate accurately the effect of factors that are identified
or fail to identify other relevant factors. Further, the information HSBC
Continental Europe uses to assess the creditworthiness of its
counterparties may be inaccurate or incorrect.
Any failure by HSBC Continental Europe to accurately estimate the
ability of its counterparties to meet their obligations could have a
material adverse effect on its business, financial condition, results of
operations and prospects.
The level of any material adverse effect will depend on the number of
borrowers and the size of the exposures involved.
HSBC Continental Europe also continues to make use of its portfolio
management processes, including an early warning system to identify
and monitor the most vulnerable customers.
Refinancing risk, liquidity and potential impact of tariffs remain the key
points of attention for the wholesale portfolio, in the current slower
GDP growth environment. The political/geopolitical context is also
challenging. HSBC Continental Europe has undertaken e xtensive
sector deep dives and tariffs reviews to seek to identify any
vulnerable counterparties.
A rolling program of sector reviews is in place.
On 1 January 2024, HSBC Continental Europe completed the sale of
its French retail banking operations. In accordance with the terms of
the sale, HSBC Continental Europe retained a portfolio of EUR 7.1
billion of home and certain other loans at the time of the sale. During
the fourth quarter of 2024 HSBC Continental Europe began to actively
market this retained loan portfolio for sale. On 31 October 2025,
HSBC Continental Europe completed the sale of its retained portfolio
to a consortium comprising Rothesay Life plc and CCF
u For further details concerning RWAs as at 31 December 2025 – see table:
Overview of risk weighted exposure amounts in the HSBC Continental
Europe Pillar 3 document.
Change in expected credit losses and other credit impairment charges
was a net charge of E UR 166 million in 2025 compared to a net
charge of EUR 91 million in 2024.
5.2 HSBC Continental Europe has significant exposure to
counterparty risk.
Probability: Likely/Impact: High (unchanged from 1H25).
HSBC Continental Europe is exposed to counterparties that are
involved in virtually all major industries, and HSBC Continental Europe
routinely executes transactions with counterparties in financial
services, including central clearing counterparties, commercial banks,
investment banks, mutual funds, and other institutional clients. Many
of these transactions expose HSBC Continental Europe to credit risk
in the event of default by a counterparty or client.
HSBC Continental Europe’s ability to engage in routine transactions to
fund its operations and manage its risks could be materially adversely
affected by the actions and commercial soundness of other financial
services institutions. Financial institutions are necessarily
interdependent because of trading, clearing, counterparty or other
relationships. Consequently, a default by, or decline in market
confidence in, individual institutions, or anxiety about the financial
services industry generally, can lead to further individual and/or
systemic difficulties, defaults and losses.
Mandatory central clearing of OTC derivatives, including under the
EU’s European Market Infrastructure Regulation, poses risks to HSBC
Continental Europe. As a clearing member, HSBC Continental Europe
is required to underwrite losses incurred at a central counterparty by
the default of other clearing members and their clients. Increased
moves towards central clearing brings with it a further element of
interconnectedness between clearing members and clients that
HSBC Continental Europe believes may increase rather than reduce
its exposure to systemic risk. At the same time, HSBC Continental
Europe’s ability to manage such risk itself will be reduced because
control has been largely outsourced to central counterparties, and it is
unclear at present how, at a time of stress, regulators and resolution
authorities will intervene.
Where bilateral counterparty risk has been mitigated by taking
collateral, credit risk for HSBC Continental Europe may remain high if
the collateral held cannot be realised or has to be liquidated at prices
that are insufficient to recover the full amount of the transaction’s
exposure. There is a risk that collateral cannot be realised, including
situations where this arises by change of law that may influence
HSBC Continental Europe’s ability to foreclose on collateral or
otherwise enforce contractual rights.

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Liquidity and concentration of the underlying market exposure or
collateral along with their potential correlation with the credit quality
of the counterparty (wrong way risk) are part of the keystones of
counterparty credit risk.
HSBC Continental Europe also has credit exposure arising from
mitigants, such as credit default swaps, and other credit derivatives,
each of which is carried at fair value. The risk of default by
counterparties to credit default swaps and other credit derivatives
used as mitigants affects the fair value of these instruments
depending on the valuation and the perceived credit risk of the
underlying instrument against which protection has been purchased.
Any such adjustments or fair value changes may have a material
adverse effect on the financial condition and results of operations of
HSBC Continental Europe.
Market events and their impacts on the portfolio are closely
monitored as part of HSBC Continental Europe's counterparty credit
risk management.
Stress testing is also a management tool used to review the HSBC
Continental Europe portfolio.
As at 31 December 2025, Counterparty Risk RWAs were EUR 5.5
billion compared to EUR 6.8 billion as at 31 December 2024.
u For further details – see RWAs as at 31 December 2025 – table: Overview
of risk weighted exposure amounts in the HSBC Continental Europe Pillar 3
document.
5.3 HSBC Continental Europe's insurance business now only via
HSBC Life Assurance (Malta) Ltd is subject to risks relating
to insurance lapse risk and changes in insurance customer
behaviour.
Probability: Likely/Impact: Low (changed from 1H25).
HSBC Continental Europe provides various life insurance products via
HSBC Life Assurance (Malta) Ltd. The cost of claims and benefits can
be influenced by many factors, including mortality and morbidity rates,
lapse and surrender rates and, if the policy has a savings element, the
performance of assets to support the liabilities. Unfavourable
developments in any of these factors could materially adversely affect
HSBC Continental Europe’s business, financial condition, results of
operations and prospects.
HSBC Life Assurance (Malta) Ltd is exposed to lapse risk, particularly
to a one-event mass lapse. Lapses on the Protection business could
be driven by the economic environment thus impacting HSBC Life
Assurance (Malta) Ltd customer’s behaviour toward allocating wealth
toward insurance. The unit-linked book is more sensitive to the
volatility of the market and low return. Mass lapses on this profitable
business would reduce the expected profit, however any impact,
when considered at an HSBC Continental Europe consolidated level,
would not be expected to be significant.
There is also exposure to lower lapses on policies where the premium
no longer covers the cost of the risk, in particular for the old policies
and those with a long maturity.
On 20 December 2024, HSBC Continental Europe signed a
memorandum of understanding for the sale of its French life
insurance business, HSBC Assurances Vie (France), to Matmut
Société d’Assurance Mutuelle. The Share Sale Agreement for the
transaction was signed on 21 March 2025 following completion of all
relevant works council information and consultation processes. The
transaction has been completed on 31 October 2025.
5.4 HSBC Continental Europe relies on recruiting, retaining and
developing appropriate senior management and skilled
personnel.
Probability: Likely/Impact: Medium (unchanged from 1H25).
HSBC Continental Europe businesses, functions and entities may be
exposed to risks associated with capacity and capability combined
with changing requirements of its workforce skills, as well as the
need to comply with employment laws and regulations. Failure to
proactively identify and manage potential capacity and / or capability
risks may impact the delivery of the strategic objectives or lead to
regulatory sanctions or legal claims, it may as well lead to poor
customer outcomes. The risks are heightened during the current
period of organisational change. While it is understood that this may
potentially heighten the overall risk profile, controls are deemed
appropriate, and no material challenges have been identified though
the risk will continue to be monitored.
Meeting the demand to recruit, retain and develop appropriate senior
management and skilled personnel remains subject to several
potential challenges. These include rapidly changing skill requirements
and ways of working and the evolving regulatory landscape. Ongoing
talent shortages in key markets, businesses and capabilities,
particularly where those with the scarce capabilities are globally
mobile, add to the complexity of the supply challenge. HSBC
Continental Europe's continued success and implementation of its
growth strategy depends in part on the retention of key members of
its management team and wider employee base, the availability of
skilled management in each of its businesses and functions, and the
ability to continue to attract, train, motivate and retain highly qualified
professionals, each of which may depend on factors beyond the
Bank’s control, including economic, market and regulatory conditions.
Furthermore, HSBC Continental Europe has the ambition for greater
representation of women in senior leadership roles. If the Bank fails
to achieve this ambition, its ability to attract and retain qualified
professionals may be affected.
Various initiatives continue to be set to enhance employee
engagement, convey a common and positive culture and enable
growth in 2025, resulting in some improvements in HSBC Continental
Europe’s key indicators.
HSBC Continental Europe’s attrition rate remained relatively stable in
2025, and remains closely monitored, with focus on certain
businesses and/or areas to proactively identify potential capacity and
capability challenges. As of 31 December 2025, the overall annualized
voluntary attrition rate stood at 5.2 per cent, up 0.6 point year on year.

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6 Risks related to HSBC Continental Europe's financial statements
6.1 HSBC Continental Europe’s financial statements are based
in part on judgements, estimates and assumptions that are
subject to uncertainty.
Probability: Unlikely/Impact: Medium (unchanged from 1H25).
The preparation of financial statements requires management to
make judgements, estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Due to
the inherent uncertainty in making estimates, particularly those
involving the use of complex models, actual results reported in future
periods could differ from those on which management’s estimates
are based.
Estimates, judgements, assumptions and models are continually
evaluated, and are based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the prevailing circumstances.
The impacts of revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future
periods affected. Accounting policies deemed critical to our results
and financial position are those that involve a high degree of
uncertainty and have a material impact on the financial statements. In
2025 these included expected credit losses, impairment of goodwill
and non-financial assets, measurement of financial instruments,
deferred tax assets, provisions, impairment of interests in associates,
or in investments in subsidiaries, as well as held for sale classification
and measurement.
The valuation of financial instruments measured at fair value can be
subjective, in particular where models are used that include
unobservable inputs. Given the uncertainty and subjectivity associated
with measuring such instruments, future outcomes may differ
materially from those assumed using information available at the
reporting date.
The effect of these differences on the future results of operations and
the future financial position of HSBC Continental Europe could be
material. If the judgement, estimates and assumptions HSBC
Continental Europe used in preparing its consolidated financial
statements are subsequently found to be materially different from
those assumed using information available at the reporting date, this
could affect its business, prospects, financial condition and results of
operations.
The measurement of expected credit losses requires the selection
and calibration of complex models and the use of estimates and
assumptions to incorporate relevant information about past events,
current conditions and forecasts of economic conditions. In addition,
significant judgement is involved in determining what is considered to
be significant increases in credit risk.
The assessment of whether goodwill and non-financial assets are
impaired, and the measurement of any impairment, involves the
application of judgement in determining key assumptions, including
discount rates, estimated cash flows for the periods for which
detailed cash flows are available and projecting the long-term pattern
of sustainable cash flows thereafter.
The recognition and measurement of deferred tax assets involves
significant judgement regarding the probability and sufficiency of
future taxable profits, taking into account the future reversal of
existing taxable temporary differences and tax planning strategies,
including corporate reorganisations.
The recognition and measurement of provisions involve significant
judgements due to the high degree of uncertainty in determining
whether a present obligation exists, and in estimating the probability
and amount of any outflows that may arise.
The assessment of the held for sale criteria involves significant
judgement with regards to classifying a sale as highly probable and
the anticipated timing for the sale to complete. The calculation of the
fair value less cost to sell as well as any related impairment loss is
subject to accounting estimates.

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Financial risk
Credit and counterparty credit risk
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty
fails to meet an obligation under a contract. Credit risk arises
principally from direct lending, trade finance and leasing business, but
also from certain other products, such as guarantees and derivatives.
Credit Risk Management
Key developments in 2025
There were no material changes to the policies and practices for the
management of credit risk in 2025. We continued to apply the
requirements of IFRS 9 ‘Financial Instruments’ within the Credit Risk
sub-function.
We actively managed the risks related to macroeconomic
uncertainties, including interest rates, inflation, fiscal and monetary
policy, broader geopolitical uncertainties and conflicts.
Governance and structure
We have established HSBC Group-wide credit risk management and
related IFRS 9 processes. We continue to assess the impact of
economic developments in key markets on specific customers,
customer segments or portfolios. As credit conditions change, we
take mitigating actions, including the revision of risk appetites or
limits and tenors, as appropriate. In addition, we continue to evaluate
the terms under which we provide credit facilities within the context
of individual customer requirements, the quality of the relationship,
local regulatory requirements, market practices and our local market
position.
Credit risk sub-function
Credit approval authorities are delegated by the Board to the Chief
Executive together with the authority to sub-delegate them. The
Credit risk sub-function in Risk is responsible for the key policies and
processes for managing credit risk, which include formulating credit
policies and risk rating frameworks, guiding the appetite for credit risk
exposures, undertaking independent reviews and objective
assessment of credit risk, and monitoring performance and
management of portfolios.
The principal objectives of HSBC Continental Europe's credit risk
management are:
– to maintain across HSBC a strong culture of responsible lending and
a robust risk policy and control framework;
– to both partner and challenge global businesses in defining,
implementing and continually re-evaluating our risk appetite under
actual and scenario conditions; and
– to ensure there is independent, expert scrutiny of credit risks, their
costs and their mitigation.
Key risk management process
IFRS 9 ‘Financial Instruments’ process
The IFRS 9 process comprises three main areas: modelling, data and
forward economic guidance; implementation; and governance.
Modelling, data and forward economic guidance
The HSBC Group has established IFRS 9 modelling and data
processes in various geographies, which are subject to internal model
risk governance including independent review of significant model
developments.
We have a centralised process for generating unbiased and
independent global economic scenarios. Scenarios are subject to a
process of review and challenge by a dedicated central team, and
individually for each region. Each quarter, the scenarios and
probability weights are reviewed and checked for consistency with
the economic conjuncture and current economic and financial risks.
These are subject to final review and approval by senior management
in a Forward Economic Guidance Global Business Impairment
Com mittee.
Implementation
A centralised impairment engine performs the expected credit losses
calculation using data, which is subject to a number of validation
checks and enhancements, from a variety of client, finance and risk
systems. Where possible, these checks and processes are
performed in a globally consistent and centralised manner.
Governance
Management review forums are established in order to review and
approve the impairment results. Regional management review
forums have representatives from Credit Risk and Finance. Required
members of the forums are the heads of Wholesale Credit, Market
Risk, and Wealth and Personal Banking Risk, as well as the global
business Chief Financial Officers and the Chief Accounting Officer.
Concentration of credit risk exposure
Concentrations of credit risk arise when a number of counterparties
or exposures have comparable economic characteristics, or are
engaged in similar activities, or operate in the same geographical
areas/industry sectors, so that their collective ability to meet
contractual obligations is uniformly affected by changes in economic,
political or other conditions.
HSBC Continental Europe uses a number of controls and measures
to minimise undue concentration of exposure in its portfolios across
industry, country and customer groups.
These include portfolio and counterparty limits, approval and review
controls, and stress testing.
Credit quality of financial instruments
The HSBC Group’s credit risk rating systems facilitates the internal
ratings-based approach under the Basel framework adopted by the
HSBC Group to support the calculation of our minimum credit
regulatory capital requirement.
The five credit quality classifications encompass a range of more
granular, internal credit rating grades assigned to wholesale and retail
customers, and the external rating, attributed by external agencies to
debt securities.
For debt securities and certain other financial instruments, external
ratings have been aligned to the five quality classifications based
upon the mapping of related Customer Risk Rating (‘CRR’) to external
credit rating.
Wholesale lending
The CRR 10-grade scale summarises a more granular underlying 23-
grade scale of obligor probability of default (PD). All corporate
customers are rated using the 10- or 23-grade scale, depending on
the degree of sophistication of the Basel approach adopted for the
exposure.

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Each CRR band is associated with an external rating grade by
reference to long-run default rates for that grade, represented by the
average of issuer-weighted historical default rates. This mapping
between internal and external ratings is indicative and may vary over
time.
Retail lending
Retail lending credit quality is based on a 12-month point-in-time
probability-weighted PD.

Credit quality classification
| Sovereign debt securities and bills | Other debt securities and bills | Wholesale lending and derivatives | Retail lending
| External credit rating | External credit rating | Internal credit rating 1 | 12-month Basel probability of default % | PD Band 2 | 12-month probability of default %
Strong | BBB and above | A- and above | CRR 1 to CRR 2 | 0 – 0.169 | band 1 to band 2 | 0.000 – 0.500
Good | BBB- to BB | BBB+ to BBB- | CRR 3 | 0.170 – 0.740 | band 3 | 0.501 – 1.500
Satisfactory | BB- to B and unrated | BB+ to B and unrated | CRR 4 to CRR 5 | 0.741 – 4.914 | band 4 to band 5 | 1.501 – 20.000
Sub-standard | B- to C | B- to C | CRR 6 to CRR 8 | 4.915 – 99.999 | band 6 | 20.001 – 99.999
Credit-impaired | Default | Default | CRR 9 to CRR 10 | 100 | band 7 | 100

1 Customer risk rating (‘CRR’).
2 12-month point-in-time (‘PIT’) probability weighted probability of default (‘PD’).

Quality classification definitions – ‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of expected loss. – 'Good’ exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk. – ‘Satisfactory’ exposures require closer monitoring and demonstrate an average to fair capacity to meet financial commitments, with moderate default risk. – ‘Sub-standard’ exposures require varying degrees of special attention and default risk is of greater concern. – ‘Credit Impaired’ exposures have been assessed as described in Note 1.2(j) to the financial statements.

Distribution of financial instruments by credit quality
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
In-scope for IFRS 9 |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 10,698 | 10,360 | 18,311 | 2,675 | 1,361 | 43,405 | (570) | 42,835
– personal | 2,506 | 60 | 136 | 3 | 65 | 2,770 | (28) | 2,742
– corporate and commercial | 5,404 | 8,574 | 12,606 | 2,504 | 1,258 | 30,346 | (516) | 29,830
– non-bank financial institutions | 2,788 | 1,726 | 5,569 | 168 | 38 | 10,289 | (26) | 10,263
Loans and advances to banks held at amortised cost | 5,041 | 162 | 512 | — | — | 5,715 | — | 5,715
Cash and balances at central banks | 58,092 | — | — | — | — | 58,092 | — | 58,092
Reverse repurchase agreements – non-trading | 23,454 | 2,576 | 3,278 | — | — | 29,308 | — | 29,308
Financial investments | 2,374 | — | 5,750 | — | — | 8,124 | — | 8,124
Assets held for sale 1 | 175 | 109 | 31 | — | — | 315 | — | 315
Prepayments, accrued income and other assets | 10,556 | 707 | 499 | 3 | 8 | 11,773 | — | 11,773
– endorsements and acceptances | — | — | — | — | — | — | — | —
– accrued income and other | 10,556 | 707 | 499 | 3 | 8 | 11,773 | — | 11,773
Debt instruments measured at fair value through other comprehensive income 2 | 19,287 | 358 | 58 | 12 | — | 19,715 | (3) | 19,712
Out-of-scope for IFRS 9 |  |  |  |  |  |  |  |
Trading assets | 22,677 | 995 | 179 | 48 | — | 23,899 | — | 23,899
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 164 | 36 | 17 | — | — | 217 | — | 217
Derivatives | 35,825 | 2,703 | 2,023 | 26 | 2 | 40,579 | — | 40,579
Assets held for sale | — | — | — | — | — | — | — | —
Total gross amount on balance sheet | 188,343 | 18,006 | 30,658 | 2,764 | 1,371 | 241,142 | (573) | 240,569
Percentage of total credit quality (%) | 78.1 | 7.5 | 12.7 | 1.1 | 0.6 | 100.0 |  |
Loan and other credit related commitments | 69,639 | 22,401 | 26,255 | 3,008 | 104 | 121,407 | (40) | 121,367
– loan and other credit related commitments for loans and advances to customers | 22,036 | 22,321 | 25,347 | 3,008 | 104 | 72,816 | (40) | 72,776
– loan and other credit related commitments for loans and advances to banks | 47,603 | 80 | 908 | — | — | 48,591 | — | 48,591
Financial guarantees | 1,156 | 269 | 349 | 51 | 38 | 1,863 | (7) | 1,856
In-scope for IFRS 9: Irrecoverable loan commitments and financial guarantees | 70,795 | 22,670 | 26,604 | 3,059 | 142 | 123,270 | (47) | 123,223
Loan and other credit related commitments | 2,702 | 2,014 | 818 | 32 | 3 | 5,569 | — | 5,569
Performance and other guarantees | 8,899 | 5,264 | 3,403 | 367 | 222 | 18,155 | (25) | 18,130

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Distribution of financial instruments by credit quality (continued)
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Out-of-scope for IFRS 9: Revocable loan commitments and non-financial guarantees | 11,601 | 7,278 | 4,221 | 399 | 225 | 23,724 | (25) | 23,699
Total nominal amount off-balance sheet | 82,396 | 29,948 | 30,825 | 3,458 | 367 | 146,994 | (72) | 146,922
At 31 Dec 2025 | 270,739 | 47,954 | 61,483 | 6,222 | 1,738 | 388,136 | (645) | 387,491

1 Includes planned sale of custodian business and fund administration services in Germany. For further details on gross carrying amounts and allowances for ECL
related to assets held for sale, see ‘Assets held for sale’ on page 161.
2 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

Distribution of financial instruments by credit quality (continued)
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
In-scope for IFRS 9 |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 18,103 | 11,526 | 18,331 | 2,202 | 1,613 | 51,775 | (487) | 51,288
– personal 1 | 9,374 | 481 | 252 | 23 | 108 | 10,238 | (45) | 10,193
– corporate and commercial | 6,624 | 9,422 | 14,107 | 2,088 | 1,496 | 33,737 | (432) | 33,305
– non-bank financial institutions | 2,105 | 1,623 | 3,972 | 91 | 9 | 7,800 | (10) | 7,790
Loans and advances to banks held at amortised cost | 4,682 | 127 | 895 | — | — | 5,704 | (1) | 5,703
Cash and balances at central banks | 48,907 | — | — | — | — | 48,907 | — | 48,907
Reverse repurchase agreements – non-trading | 22,742 | 2,929 | 93 | — | — | 25,764 | — | 25,764
Financial investments | 2,141 | — | 1,197 | — | — | 3,338 | — | 3,338
Assets held for sale 2 | 2,171 | 129 | 175 | — | — | 2,475 | — | 2,475
Prepayments, accrued income and other assets | 15,570 | 622 | 1,019 | 4 | 9 | 17,224 | — | 17,224
– endorsements and acceptances | — | — | 1 | — | — | 1 | — | 1
– accrued income and other | 15,570 | 622 | 1,018 | 4 | 9 | 17,223 | — | 17,223
Debt instruments measured at fair value through other comprehensive income 3,4 | 25,990 | 80 | 91 | — | — | 26,161 | (5) | 26,156
Out-of-scope for IFRS 9 |  |  |  |  |  |  |  |
Trading assets | 15,999 | 226 | 322 | 7 | 3 | 16,557 | — | 16,557
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 217 | 43 | 30 | — | — | 290 | — | 290
Derivatives | 41,315 | 1,046 | 847 | 31 | 12 | 43,251 | — | 43,251
Assets held for sale | 2,900 | — | — | — | — | 2,900 | — | 2,900
Total gross amount on balance sheet | 200,737 | 16,728 | 23,000 | 2,244 | 1,637 | 244,346 | (493) | 243,853
Percentage of total credit quality (%) | 82.2 | 6.8 | 9.4 | 0.9 | 0.7 | 100.0 |  |
Loan and other credit related commitments | 61,962 | 23,486 | 17,074 | 2,004 | 130 | 104,656 | (33) | 104,623
– loan and other credit related commitments for loans and advances to customers | 27,994 | 23,416 | 16,958 | 1,964 | 130 | 70,462 | (33) | 70,429
– loan and other credit related commitments for loans and advances to banks | 33,968 | 70 | 116 | 40 | — | 34,194 | — | 34,194
Financial guarantees | 1,011 | 473 | 384 | 38 | 44 | 1,950 | (7) | 1,943
In-scope for IFRS 9: Irrecoverable loan commitments and financial guarantees | 62,973 | 23,959 | 17,458 | 2,042 | 174 | 106,606 | (40) | 106,566
Loan and other credit related commitments | 2,817 | 2,376 | 910 | 53 | 8 | 6,164 | — | 6,164
Performance and other guarantees | 7,386 | 5,274 | 3,796 | 287 | 157 | 16,900 | (30) | 16,870
Out-of-scope for IFRS 9: Revocable loan commitments and non-financial guarantees | 10,203 | 7,650 | 4,706 | 340 | 165 | 23,064 | (30) | 23,034
Total nominal amount off-balance sheet | 73,176 | 31,609 | 22,164 | 2,382 | 339 | 129,670 | (70) | 129,600
At 31 Dec 2024 | 273,913 | 48,337 | 45,164 | 4,626 | 1,976 | 374,016 | (563) | 373,453

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion as at
31 December 2024, of which EUR 6.3 billion guaranteed by Crédit Logement.
2 Includes planned sale of private banking business in Germany and life insurance business in France. For further details on gross carrying amounts and
allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 161.
3 Includes EUR 8.8 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.
4 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

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Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Loans and advances to customers at amortised cost | 10,698 | 10,360 | 18,311 | 2,675 | 1,361 | 43,405 | (570) | 42,835
– stage 1 | 10,591 | 9,848 | 16,310 | 1,466 | — | 38,215 | (45) | 38,170
– stage 2 | 107 | 512 | 2,001 | 1,209 | — | 3,829 | (71) | 3,758
– stage 3 | — | — | — | — | 1,360 | 1,360 | (454) | 906
– POCI | — | — | — | — | 1 | 1 | — | 1
Loans and advances to banks at amortised cost | 5,041 | 162 | 512 | — | — | 5,715 | — | 5,715
– stage 1 | 5,020 | 159 | 512 | — | — | 5,691 | — | 5,691
– stage 2 | 21 | 3 | — | — | — | 24 | — | 24
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost 1 | 94,651 | 3,392 | 9,558 | 3 | 8 | 107,612 | — | 107,612
– stage 1 | 94,651 | 3,381 | 9,556 | — | — | 107,588 | — | 107,588
– stage 2 | — | 11 | 2 | 3 | — | 16 | — | 16
– stage 3 | — | — | — | — | 8 | 8 | — | 8
– POCI | — | — | — | — | — | — | — | —
Loan and other credit-related commitments | 69,639 | 22,401 | 26,255 | 3,008 | 104 | 121,407 | (40) | 121,367
– stage 1 | 69,028 | 22,099 | 24,960 | 2,335 | — | 118,422 | (15) | 118,407
– stage 2 | 611 | 302 | 1,295 | 673 | — | 2,881 | (13) | 2,868
– stage 3 | — | — | — | — | 104 | 104 | (12) | 92
– POCI | — | — | — | — | — | — | — | —
Financial guarantees 2 | 1,156 | 269 | 349 | 51 | 38 | 1,863 | (7) | 1,856
– stage 1 | 1,154 | 265 | 256 | 19 | — | 1,694 | (1) | 1,693
– stage 2 | 2 | 4 | 93 | 32 | — | 131 | (5) | 126
– stage 3 | — | — | — | — | 38 | 38 | (1) | 37
– POCI | — | — | — | — | — | — | — | —
Total on balance sheet and off balance sheet excluding debt instrument at FVOCI | 181,185 | 36,584 | 54,985 | 5,737 | 1,511 | 280,002 | (617) | 279,385
Debt instruments at FVOCI 3 | 19,287 | 358 | 58 | 12 | — | 19,715 | (3) | 19,712
– stage 1 | 19,239 | 358 | 56 | 3 | — | 19,656 | (3) | 19,653
– stage 2 | 48 | — | 2 | 9 | — | 59 | — | 59
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2025 | 200,472 | 36,942 | 55,043 | 5,749 | 1,511 | 299,717 | (620) | 299,097

1 Includes planned sale of custodian business and fund administration services in Germany. For further details on gross carrying amounts and allowances for ECL
related to assets held for sale, see ‘Assets held for sale’ on page 161.
2 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
3 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

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Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation (continued)
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Loans and advances to customers at amortised cost | 18,103 | 11,526 | 18,331 | 2,202 | 1,613 | 51,775 | (487) | 51,288
– stage 1 | 17,855 | 11,156 | 15,665 | 895 | — | 45,571 | (40) | 45,531
– stage 2 | 248 | 370 | 2,666 | 1,307 | — | 4,591 | (85) | 4,506
– stage 3 | — | — | — | — | 1,612 | 1,612 | (362) | 1,250
– POCI | — | — | — | — | 1 | 1 | — | 1
Loans and advances to banks at amortised cost | 4,682 | 127 | 895 | — | — | 5,704 | (1) | 5,703
– stage 1 | 4,660 | 126 | 893 | — | — | 5,679 | (1) | 5,678
– stage 2 | 22 | 1 | 2 | — | — | 25 | — | 25
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost 1 | 91,531 | 3,680 | 2,484 | 4 | 9 | 97,708 | — | 97,708
– stage 1 | 91,531 | 3,656 | 2,480 | — | — | 97,667 | — | 97,667
– stage 2 | — | 24 | 4 | 4 | — | 32 | — | 32
– stage 3 | — | — | — | — | 9 | 9 | — | 9
– POCI | — | — | — | — | — | — | — | —
Loan and other credit-related commitments | 61,962 | 23,486 | 17,074 | 2,004 | 130 | 104,656 | (33) | 104,623
– stage 1 | 61,630 | 22,414 | 15,480 | 1,424 | — | 100,948 | (9) | 100,939
– stage 2 | 332 | 1,072 | 1,594 | 580 | — | 3,578 | (14) | 3,564
– stage 3 | — | — | — | — | 130 | 130 | (10) | 120
– POCI | — | — | — | — | — | — | — | —
Financial guarantees 2 | 1,011 | 473 | 384 | 38 | 44 | 1,950 | (7) | 1,943
– stage 1 | 1,011 | 465 | 374 | 6 | — | 1,856 | (1) | 1,855
– stage 2 | — | 8 | 10 | 32 | — | 50 | (2) | 48
– stage 3 | — | — | — | — | 44 | 44 | (4) | 40
– POCI | — | — | — | — | — | — | — | —
Total on balance sheet and off balance sheet excluding debt instrument at FVOCI | 177,289 | 39,292 | 39,168 | 4,248 | 1,796 | 261,793 | (528) | 261,265
Debt instruments at FVOCI 3,4 | 25,990 | 80 | 91 | — | — | 26,161 | (5) | 26,156
– stage 1 | 25,943 | 80 | 91 | — | — | 26,114 | (5) | 26,109
– stage 2 | 47 | — | — | — | — | 47 | — | 47
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 203,279 | 39,372 | 39,259 | 4,248 | 1,796 | 287,954 | (533) | 287,421

1 Includes planned sale of private banking business in Germany and life insurance business in France. For further details on gross carrying amounts and
allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 161.
2 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
3 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.
4 Includes EUR 8.8 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.
Impairment assessment
Management regularly evaluates the adequacy of the established
allowances for impaired loans by conducting a detailed review of the
loan portfolio, comparing performance and delinquency statistics with
historical trends and assessing the impact of current economic
conditions.
Impaired loans – identification of loss events
The criteria used by HSBC Continental Europe to determine that a
loan is impaired includes:
– known cash flow difficulties experienced by the borrower;
– contractual payments of either principal or interest being past due
for more than 90 days;
– the probability that the borrower will enter bankruptcy or other
financial distress procedure;
– a concession granted to the borrower for economic or legal reasons
relating to the borrower’s financial difficulty that results in
forgiveness or postponement of principal, interest or fees; and
– a deterioration in the financial condition or outlook of the borrower
such that its ability to repay is considered doubtful.
Impairment of loans and advances
For details of HSBC Continental Europe's policy concerning
impairments of loans and advances, please refer to N ote 1.2(j) on the
financial statements.

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Summary of credit risk
The disclosure below presents the gross carrying/nominal amount of
financial instruments to which the impairment requirements in IFRS 9
are applied and the associated allowance for ECL. Due to the forward-
looking nature of IFRS 9, the scope of financial instruments on which
ECL are recognised is greater than the scope of IAS 39. The following
tables show the allocation of loans and ECL allowance according to
the kind of loans and nature of counterparties.

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
| At 31 Dec 2025 | At 31 Dec 2024
| Gross carrying/ nominal amount | Provision for ECL 1 | Gross carrying/ nominal amount | Provision for ECL 1
| €m | €m | €m | €m
Loans and advances to customers at amortised cost 2 | 43,405 | (570) | 51,775 | (487)
Loans and advances to banks at amortised cost | 5,715 | — | 5,704 | (1)
Other financial assets measured at amortised costs: | 107,297 | — | 95,233 | —
– cash and balances at central banks | 58,092 | — | 48,907 | —
– reverse repurchase agreements – non-trading | 29,308 | — | 25,764 | —
– financial investments 3 | 8,124 | — | 3,338 | —
– prepayments, accrued income and other assets 4 | 11,773 | — | 17,224 | —
Assets held for sale 5 | 315 | — | 2,475 | —
Total gross carrying amount on balance sheet | 156,732 | (570) | 155,187 | (488)
Loans and other credit related commitments: | 121,407 | (40) | 104,656 | (33)
Financial guarantees 6 | 1,863 | (7) | 1,950 | (7)
Total nominal amount off-balance sheet 7 | 123,270 | (47) | 106,606 | (40)
Total nominal amount on balance sheet and off-balance sheet | 280,002 | (617) | 261,793 | (528)
| Fair value | Memorandum Provision for ECL 8 | Fair value | Memorandum Provision for ECL 8
| €m | €m | €m | €m
Debt instruments measured at fair value through other comprehensive income (‘FVOCI’) | 19,833 | (3) | 25,567 | (5)

1 The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which
case the ECL is recognised as a provision.
2 Loans and advances to customers in the comparative period 2024 include EUR 6.7 billion of home and certain other loans following the sale of retail banking
operations in France.
3 Includes only financial investments measured at amortised cost. ‘Financial investments’ as presented within the consolidated balance sheet on page 193
includes financial assets measured at amortised cost and debt and equity instruments measured at fair value through other comprehensive income.
4 Includes only those financial instruments which are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as
presented within the consolidated balance sheet on page 193 comprises both financial and non-financial assets, including cash collateral and settlement
accounts.
5 Includes planned sale of custodian business and fund administration services in Germany. For further details on gross carrying amounts and allowances for ECL
related to assets held for sale, see ‘Assets held for sale’ on page 161.
6 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
7 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
8 Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in
‘Change in expected credit losses and other credit impairment charges’ in the income statement.

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Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2025
| Gross carrying/nominal amount 1 | Provision for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | % | % | % | % | %
Loans and advances to customers at amortised cost | 38,215 | 3,829 | 1,360 | 1 | 43,405 | (45) | (71) | (454) | — | (570) | 0.1 | 1.9 | 33.4 | — | 1.3
– personal | 2,571 | 134 | 65 | — | 2,770 | (4) | (3) | (21) | — | (28) | 0.2 | 2.2 | 32.3 | — | 1.0
– corporate and commercial | 26,010 | 3,078 | 1,257 | 1 | 30,346 | (36) | (65) | (415) | — | (516) | 0.1 | 2.1 | 33.0 | — | 1.7
– non-bank financial institutions | 9,634 | 617 | 38 | — | 10,289 | (5) | (3) | (18) | — | (26) | 0.1 | 0.5 | 47.4 | — | 0.3
Loans and advances to banks at amortised cost | 5,691 | 24 | — | — | 5,715 | — | — | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 107,273 | 16 | 8 | — | 107,297 | — | — | — | — | — | — | — | — | — | —
Assets held for sale 2 | 315 | — | — | — | 315 | — | — | — | — | — | — | — | — | — | —
Loan and other credit- related commitments | 118,422 | 2,881 | 104 | — | 121,407 | (15) | (13) | (12) | — | (40) | — | 0.5 | 11.5 | — | —
– personal | 312 | 5 | — | — | 317 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 53,224 | 2,622 | 104 | — | 55,950 | (13) | (12) | (12) | — | (37) | — | 0.5 | 11.5 | — | 0.1
– financial | 64,886 | 254 | — | — | 65,140 | (2) | (1) | — | — | (3) | — | 0.4 | — | — | —
Financial guarantees 3 | 1,694 | 131 | 38 | — | 1,863 | (1) | (5) | (1) | — | (7) | 0.1 | 3.8 | 2.6 | — | 0.4
– personal | 17 | — | — | — | 17 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 684 | 127 | 38 | — | 849 | (1) | (5) | (1) | — | (7) | 0.1 | 3.9 | 2.6 | — | 0.8
– financial | 993 | 4 | — | — | 997 | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2025 | 271,610 | 6,881 | 1,510 | 1 | 280,002 | (61) | (89) | (467) | — | (617) | — | 1.3 | 30.9 | — | 0.2

1 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
2 Includes planned sale of custodian business and fund administration services in Germany. For further details on gross carrying amounts and allowances for ECL
related to assets held for sale, see ‘Assets held for sale’ on page 161.
3 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
Unless identified at an earlier stage, all financial assets are deemed to
have suffered a significant increase in credit risk when they are 30
days past due and are transferred from stage 1 to stage 2.
The disclosure below presents the ageing of stage 2 financial assets
by those less than 30 and greater than 30 days past due and therefore
presents those financial assets classified as stage 2 due to ageing (30
days past due) and those identified at an earlier stage (less than 30
days past due).
Past due financial instruments are those loans where customers have
failed to make payments in accordance with the contractual terms of
their facilities.

Stage 2 days past due analysis at 31 December 2025
| Gross carrying amount | Provision for ECL | ECL coverage %
| Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | Stage 2 | of which: | of which:
| 1 to 29 DPD 1'2 | 30 and > DPD 1'2 | 1 to 29 DPD 1'2 | 30 and > DPD 1'2 | 1 to 29 DPD 1'2 | 30 and > DPD 1'2
| €m | €m | €m | €m | €m | €m | % | % | %
Loans and advances to customers at amortised cost | 3,829 | 48 | 35 | (71) | — | — | 1.9 | — | —
– personal | 134 | 15 | 3 | (3) | — | — | 2.2 | — | —
– corporate and commercial | 3,078 | 31 | 22 | (65) | — | — | 2.1 | — | —
– non-bank financial institutions | 617 | 2 | 10 | (3) | — | — | 0.5 | — | —
Loans and advances to banks at amortised cost | 24 | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 16 | 1 | 1 | — | — | — | — | — | —
Assets held for sale | — | — | — | — | — | — | — | — | —

1 Days past due ('DPD'), amounts presented above are on contractual basis.
2 Up-to-date accounts in stage 2 are not shown in amounts presented above.

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Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2024 (continued)
| Gross carrying/nominal amount 1 | Provision for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | % | % | % | % | %
Loans and advances to customers at amortised cost: | 45,571 | 4,591 | 1,612 | 1 | 51,775 | (40) | (85) | (362) | — | (487) | 0.1 | 1.9 | 22.5 | — | 0.9
– personal 2 | 9,840 | 290 | 108 | — | 10,238 | (3) | (10) | (32) | — | (45) | — | 3.4 | 29.6 | — | 0.4
– corporate and commercial | 28,015 | 4,226 | 1,495 | 1 | 33,737 | (34) | (74) | (324) | — | (432) | 0.1 | 1.8 | 21.7 | — | 1.3
– non-bank financial institutions | 7,716 | 75 | 9 | — | 7,800 | (3) | (1) | (6) | — | (10) | — | 1.3 | 66.7 | — | 0.1
Loans and advances to banks at amortised cost | 5,679 | 25 | — | — | 5,704 | (1) | — | — | — | (1) | — | — | — | — | —
Other financial assets measured at amortised cost | 95,209 | 15 | 9 | — | 95,233 | — | — | — | — | — | — | — | — | — | —
Assets held for sale 3 | 2,458 | 17 | — | — | 2,475 | — | — | — | — | — | — | — | — | — | —
Loan and other credit-related commitments | 100,948 | 3,578 | 130 | — | 104,656 | (9) | (14) | (10) | — | (33) | — | 0.4 | 7.7 | — | —
– personal | 308 | 4 | — | — | 312 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 50,394 | 3,545 | 130 | — | 54,069 | (8) | (14) | (10) | — | (32) | — | 0.4 | 7.7 | — | 0.1
– financial | 50,246 | 29 | — | — | 50,275 | (1) | — | — | — | (1) | — | — | — | — | —
Financial guarantees 4 | 1,856 | 50 | 44 | — | 1,950 | (1) | (2) | (4) | — | (7) | 0.1 | 4.0 | 9.1 | — | 0.4
– personal | 38 | — | — | — | 38 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 837 | 46 | 44 | — | 927 | (1) | (2) | (4) | — | (7) | 0.1 | 4.3 | 9.1 | — | 0.8
– financial | 981 | 4 | — | — | 985 | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 251,721 | 8,276 | 1,795 | 1 | 261,793 | (51) | (101) | (376) | — | (528) | — | 1.2 | 20.9 | — | 0.2

1 Represents the maximum amount at risk should the contracts be fully drawn upon and customers default.
2 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion as at
31 December 2024, of which EUR 6.3 billion guaranteed by Crédit Logement.
3 Includes planned sale of private banking business in Germany and life insurance business in France. For further details on gross carrying amounts and allowances
for ECL related to assets held for sale, see ‘Assets held for sale’ on page 161.
4 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

Stage 2 days past due analysis at 31 December 2024 (continued)
| Gross carrying amount | Provision for ECL | ECL coverage %
| Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | Stage 2 | of which: | of which:
| 1 to 29 DPD 1 | 30 and > DPD 1 | 1 to 29 DPD 1 | 30 and > DPD 1 | 1 to 29 DPD 1 | 30 and > DPD 1
| €m | €m | €m | €m | €m | €m | % | % | %
Loans and advances to customers at amortised cost | 4,591 | 55 | 42 | (85) | (2) | — | 1.9 | 3.6 | —
– personal | 290 | 49 | 7 | (10) | (2) | — | 3.4 | 4.1 | —
– corporate and commercial | 4,226 | 5 | 34 | (74) | — | — | 1.8 | — | —
– non-bank financial institutions | 75 | 1 | 1 | (1) | — | — | 1.3 | — | —
Loans and advances to banks at amortised cost | 25 | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 15 | — | — | — | — | — | — | — | —
Assets held for sale 2 | 17 | — | — | — | — | — | — | — | —

1 Days past due ('DPD'), amounts presented above are on contractual basis.
2 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 161.
Stage 2 Decomposition at 31 December 2025
The following disclosure presents the stage 2 decomposition of gross
carrying amount and allowances for ECL for loans and advances to
customers.
The table below discloses the reason why an exposure moved into
stage 2 originally, and is therefore presented as a significant increase
in credit risk since origination.
The quantitative classification shows when the relevant reporting date
PD measure exceeds defined quantitative thresholds for retail and
wholesale exposures, as set out in Note 1.2 'Summary of material
accounting policies',on page 199.
The Qualitative classification primarily accounts for CRR deterioration,
watch & worry and retail management judgemental adjustments.
u For further details on our approach to the assessment of significant increase
in credit risk, see Note 1.2 'Summary of material accounting policies' on
pages 199.

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Stage 2 Decomposition at 31 December 2025
| Gross carrying amount | Provision for ECL | ECL Coverage % Total
Loans and advances to customers | Personal | Corporate and commercial | Non-bank financial institutions | Total | Personal | Corporate and commercial | Non-bank financial institutions | Total
€m | €m | €m | €m | €m | €m | €m | €m | %
Quantitative | 134 | 1,449 | 28 | 1,611 | (3) | (34) | (1) | (38) | 2.4
Qualitative | — | 1,608 | 579 | 2,187 | — | (31) | (2) | (33) | 1.5
30 days past due backstop | — | 21 | 10 | 31 | — | — | — | — | —
Total Stage 2 | 134 | 3,078 | 617 | 3,829 | (3) | (65) | (3) | (71) | 1.9

Stage 2 Decomposition at 31 December 2024
| Gross carrying amount | Provision for ECL | ECL Coverage % Total
Loans and advances to customers | Personal | Corporate and commercial | Non-bank financial institutions | Total | Personal | Corporate and commercial | Non-bank financial institutions | Total
€m | €m | €m | €m | €m | €m | €m | €m | %
Quantitative | 281 | 1,931 | 20 | 2,232 | (10) | (31) | — | (41) | 1.8
Qualitative | 4 | 2,277 | 54 | 2,335 | — | (43) | (1) | (44) | 1.9
30 days past due backstop | 5 | 18 | 1 | 24 | — | — | — | — | —
Total stage 2 | 290 | 4,226 | 75 | 4,591 | (10) | (74) | (1) | (85) | 1.9

Maximum exposure to credit risk
The following table presents our maximum exposure before taking
account of any collateral held or other credit enhancements (unless
such enhancements meet accounting offsetting requirements). The
table excludes financial instruments whose carrying amount best
represents the net exposure to credit risk and it excludes equity
securities as they are not subject to credit risk. For the financial
assets recognised on the balance sheet, the maximum exposure to
credit risk equals their carrying amount; for financial guarantees and
other guarantees granted, it is the maximum amount that we would
have to pay if the guarantees were called upon. For loan
commitments and other credit-related commitments, it is generally
the full amount of the committed facilities.
The offset in the table relates to amounts where there is a legally
enforceable right of offset in the event of counterparty default and
where, as a result, there is a net exposure for credit risk purposes.
However, as there is no intention to settle these balances on a net
basis under normal circumstances, they do not qualify for net
presentation for accounting purposes. No offset has been applied to
off-balance sheet collateral. In the case of derivatives the offset
column also includes collateral received in cash and other financial
assets.

Maximum exposure to credit risk
| At 31 Dec 2025
| Maximum exposure | Offset | Net
| €m | €m | €m
Loans and advances to customers held at amortised cost | 42,835 | — | 42,835
– personal | 2,742 | — | 2,742
– corporate and commercial | 29,830 | — | 29,830
– non-bank financial institutions | 10,263 | — | 10,263
Loans and advances to banks at amortised cost | 5,715 | — | 5,715
Other financial assets held at amortised cost | 107,545 | (4,480) | 103,065
– cash and balances at central banks | 58,092 | — | 58,092
– reverse repurchase agreements – non-trading | 29,308 | (4,480) | 24,828
– financial investments | 8,124 | — | 8,124
– prepayments, accrued income and other assets | 12,021 | — | 12,021
Assets held for sale 1 | 377 | — | 377
Derivatives | 40,579 | (39,470) | 1,109
Total on-balance sheet exposure to credit risk | 197,051 | (43,950) | 153,101
Total off-balance sheet | 146,922 | — | 146,922
– financial and other guarantees 2 | 19,986 | — | 19,986
– loan and other credit-related commitments | 126,936 | — | 126,936
Total on and off-balance sheet amount | 343,973 | (43,950) | 300,023

1 Includes planned sale of custodian business and fund administration services in Germany. For further details on gross carrying amounts and allowances for ECL
related to assets held for sale, see ‘Assets held for sale’ on page 161.
2'Financial and other guarantees' represents 'Financial guarantees' and 'Performance and other guarantees' as disclosed in Note 31.

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Maximum exposure to credit risk (continued)
| At 31 Dec 2024
| Maximum exposure | Offset | Net
| €m | €m | €m
Loans and advances to customers held at amortised cost | 51,288 | — | 51,288
– personal 1 | 10,193 | — | 10,193
– corporate and commercial | 33,305 | — | 33,305
– non-bank financial institutions | 7,790 | — | 7,790
Loans and advances to banks at amortised cost | 5,703 | — | 5,703
Other financial assets held at amortised cost | 95,437 | (3,335) | 92,102
– cash and balances at central banks | 48,907 | — | 48,907
– reverse repurchase agreements – non-trading | 25,764 | (3,335) | 22,429
– financial investments | 3,338 | — | 3,338
– prepayments, accrued income and other assets | 17,428 | — | 17,428
Assets held for sale 2 | 25,477 | — | 25,477
Derivatives | 43,251 | (39,756) | 3,495
Total on-balance sheet exposure to credit risk | 221,156 | (43,091) | 178,065
Total off-balance sheet | 129,600 | — | 129,600
– financial and other guarantees 3 | 18,813 | — | 18,813
– loan and other credit-related commitments | 110,787 | — | 110,787
Total on and off-balance sheet amount | 350,756 | (43,091) | 307,665

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion as at
31 December 2024, of which EUR 6.3 billion guaranteed by Crédit Logement.
2 Includes planned sale of private banking business in Germany and life insurance business i n France. For further details on gross carrying amounts and allowances
for ECL related to assets held for sale, see ‘Assets held for sale’ on page 161.
3'Financial and other guarantees' represents 'Financial guarantees' and 'Performance and other guarantees' as disclosed in Note 31.
Measurement uncertainty and sensitivity analysis of ECL estimates
The recognition and measurement of ECL involves the use of
judgement and estimation. HSBC Continental Europe forms multiple
economic scenarios, apply these forecasts to credit risk models to
estimate future credit losses and probability-weight the results to
determine an unbiased ECL estimate.
Management assessed the current economic environment, reviewed
the latest forecasts and discussed key risks before selecting the
appropriate economic scenarios and their weightings.
Management judgemental adjustments are used where modelled
ECL does not fully reflect the identified risks and related uncertainty,
or to capture significant late breaking events.
Methodology
At 31 December 2025, four economic scenarios were used to capture
the latest economic environment and to articulate management’s
view of the range of potential outcomes. Scenarios are created using
the latest economic forecasts and distributional estimates each
quarter.
Three scenarios, the Upside, Central and Downside, are drawn from
external consensus forecasts, market data and distributional
estimates of the entire range of economic outcomes. These
estimates are used as conditioning assumptions in a modelled
expansion of other variables, to ensure scenarios are economically
coherent and internally consistent. The fourth scenario, the Downside
2, represents management's view of severe downside risks.
The consensus Central scenario is deemed the 'most likely' scenario,
and attracts the largest probability weighting. It is created using
consensus forecasts, which is the average of a panel of external
forecasts. The consensus outer scenarios represent short-term
cyclical deviations from the Central scenario, where variable paths
converge back to long-term trend expectations. They are calibrated to
a 10 per cent probability.
HSBC’s Central Scenario assumes that the effects of announced
climate measures, carbon pricing and green levies are incorporated
into economic forecasts where their short-term effects are known
from enacted legislation, or may be reasonably projected from current
trends and statutory targets.
Variable paths and projections aligned with long-term climate
outcomes, but which are dependent on additional policy adjustments,
carry greater uncertainty.
The fourth scenario, the Downside 2, explores a more extreme
economic outcome than those captured by the consensus scenarios.
In this scenario, variables do not, by design, revert to long-term trend
expectations and may instead explore alternative states of
equilibrium, where economic variables move permanently away from
past trends. It is calibrated to a 5 per cent probability.
In most circumstances, the alignment of weightings with the
calibrated probability of scenarios is deemed appropriate for the
unbiased estimation of ECL. However, management may depart from
this probability-based scenario weighting approach when the
economic outlook and forecasts are determined to be particularly
uncertain and risks are elevated.

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Description of economic scenarios
The economic assumptions presented in this section have been
formed by HSBC with reference to external forecasts and estimates
for the purpose of calculating ECL.
Forecasts may change and remain subject to uncertainty. Outer
scenarios are designed to capture the potential crystallisation of key
economic and financial risks and alternative paths for economic
variables.
The scenarios used to calculate ECL are described below.
The consensus Central scenario
HSBC’s Central scenario incorporates higher growth forecasts for
2026 relative to the fourth quarter of 2025, in most of our key
markets. The change in forecasts for 2027 is more mixed, reflecting
differing regional dynamics. The scenario is modelled consistent with
a US tariff rate, measured as an effective trade-weighted average, of
15 per cent at the start of 2026. That rate has fallen in recent months
as it reflects the lowering of US tariff rates on imports from mainland
China, the conclusion of a trade agreement with Switzerland and
targeted tariff exemptions on key products.
Global GDP is expected to grow by 2.5 per cent in 2026 in the Central
scenario and the average rate of global GDP growth is forecast to be
2.6 per cent over the five-year forecast period.
The key features of our Central scenario are:
– Forecast GDP growth has improved since the fourth quarter of
2024, although the outlook still envisages either a slowdown or
stabilisation in growth ext year, relative to 2025, for most markets.
– In most markets, unemployment is expected to rise moderately in
2026 in line with slower economic activity and subdued hiring. It will
remain relatively low by historical standards.
– The evolution of inflation is mixed. In France, as energy base effects
dissipate, prices are projected to pick-up over 2026, supported by
relatively robust services inflation and rising food prices. But overall,
inflation remains subdued.
– Challenging conditions are also forecasted to continue in certain
segments of the commercial property sector in a number of our key
markets. Structural changes to demand in the office segment in
particular has driven lower valuations.
– Policy interest rates in key markets are forecasted to gradually
decline further in 2026. In the longer term they are expected to
remain at a higher level than in recent years.
– The Brent crude oil price is forecasted to average USD 65 per barrel
over the projection period.
The Central scenario was created with forecasts available in late
November, and subsequently kept under review until the end of
December 2025. In accordance with HSBC’s scenario framework, a
probability weight of 75 per cent has been assigned to the Central
scenario for France.
The following table describes key macroeconomic variables in the
consensus Central scenario.

Consensus Central scenario 2026–2030 (as at 4Q25)
| France
GDP (annual average growth rate, %) |
2026 | 0.9
2027 | 1.2
2028 | 1.3
2029 | 1.3
2030 | 1.3
5-year average 1 | 1.2
Unemployment rate (%) |
2026 | 7.6
2027 | 7.6
2028 | 7.5
2029 | 7.4
2030 | 7.4
5-year average 1 | 7.5
House prices (annual average growth rate, %) |
2026 | 4.3
2027 | 5.0
2028 | 4.1
2029 | 3.1
2030 | 2.2
5-year average 1 | 3.7
Inflation (annual average growth rate, %) |
2026 | 1.4
2027 | 1.7
2028 | 2.1
2029 | 2.1
2030 | 1.9
5-year average 1 | 1.9
Central bank policy rate (annual average, %) |
2026 | 1.9
2027 | 2.0
2028 | 2.1
2029 | 2.3
2030 | 2.5
5-year average 1 | 2.2
Probability (%) | 75

1 The five-year average is calculated over a projected period of 20 quarters
from 1Q26 to 4Q30.

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Consensus Central scenario 2025–2029 (as at 4Q24) (continued)
| France
GDP (annual average growth rate, %) |
2025 | 0.9
2026 | 0.9
2027 | 1.4
2028 | 1.5
2029 | 1.4
5-year average 1 | 1.2
Unemployment rate (%) |
2025 | 7.5
2026 | 7.3
2027 | 7.2
2028 | 7.0
2029 | 7.0
5-year average 1 | 7.2
House prices (annual average growth rate, %) |
2025 | 2.1
2026 | 4.4
2027 | 4.4
2028 | 3.8
2029 | 3.1
5-year average 1 | 3.6
Inflation (annual average growth rate, %) |
2025 | 1.2
2026 | 1.6
2027 | 2.0
2028 | 2.3
2029 | 2.2
5-year average 1 | 1.9
Central bank policy rate (annual average, %) |
2025 | 2.1
2026 | 1.8
2027 | 2.0
2028 | 2.0
2029 | 2.1
5-year average 1 | 2.0
Probability (%) | 75

1 The five-year average is calculated over a projected period of 20 quarters
from 1Q25 to 4Q29.
The consensus Upside scenario
Compared with the Central scenario, the consensus Upside scenario
features stronger economic activity in the near term, before
converging to long-run trend expectations. It also incorporates lower
unemployment and higher asset prices than incorporated in Central
scenario. Inflation accelerates modestly driven by increased
investments and higher consumption spending.
The scenario is consistent with a number of key upside risk themes.
These include partial rollback of tariff measures, deregulation, an
improvement in the US-China relationship and a de-escalation in
geopolitical tensions.
The following table describes key macroeconomic variables for France
in the consensus Upside scenario.

Consensus Upside scenario 2026-2030 (as at 4Q25)
| % |
GDP level (%, start-to-peak)1 | 8.5 | (4Q30)
Unemployment rate (%, min)2 | 6.6 | (4Q27)
House price index (%, start-to-peak)1 | 22.6 | (4Q30)
Inflation rate (YoY % change, max)3 | 2.4 | (4Q27)
Central bank policy rate (%, max)3 | 2.5 | (4Q30)
Probability (%) | 10

1 Cumulative change to the highest level of the series during the 20-quarter
projection.
2 The lowest projected unemployment in the scenario.
3 The highest projected policy rate and year-on-year percentage change in
inflation in the scenario.

Consensus Upside scenario 2025–2029 (as at 4Q24)
| % |
GDP level (%, start-to-peak)1 | 8.9 | (4Q29)
Unemployment rate (%, min)2 | 6.4 | (4Q26)
House price index (%, start-to-peak)1 | 22.8 | (4Q29)
Inflation rate (YoY % change, min)3 | 0.1 | (4Q25)
Central bank policy rate (%, min)3 | 1.4 | (3Q25)
Probability (%) | 10

1 Cumulative change to the highest level of the series during the 20-quarter
projection.
2 The lowest projected unemployment in the scenario.
3 The lowest projected policy rate and year-on-year percentage change in
inflation in the scenario.
Downside scenarios
Downside scenarios explore the intensification and crystallisation of a
number of key themes and are modelled so that economic shocks
drive consumption and investment lower and commodity prices fall.
For most markets, inflation and interest rates are lower compared
with the Central scenario.
Key downside risks include:
– an increase in protectionist policies. This lowers investment,
complicates international supply chains, and impedes trade flows;
– abrupt asset repricing given elevated valuations, particularly in the
tech sector, eroding wealth effects and ultimately increasing credit
risks;
– broader and more prolonged conflicts in the Middle East and
between Russia and Ukraine, which undermine confidence and
investment; and
– continued differences between the US and China, which affect
economic confidence and the global goods trade and supply chains
for critical technologies.
The consensus Downside scenario
In the consensus Downside scenario, the effects of tariffs on the
global economy are worse than expected, leading to weaker
economic activity compared with the Central scenario. The scenario is
consistent with the tariff rate, measured as an effective trade-
weighted average, rising to 19 per cent in 2026, and remaining at that
level in 2027. The key driver of that increase is the application of
sector-specific tariff rates.
In this scenario GDP declines and unemployment rates rise, while
asset prices and commodity prices fall. The scenario features an
escalation in geopolitical tensions and an increase in tariffs over and
above those assumed in the Central scenario. Existing and recently
approved trade agreements are assumed to hold. In most markets,
inflation declines relative to the Central scenario, as tariffs are
assumed to drive a drop in export demand from the US.
In the scenario, oil prices trough at USD 40 per barrel.
The following table describes key macroeconomic variables for France
in the consensus Downside scenario.

Consensus Downside scenario 2026-2030 (as at 4Q25)
| % |
GDP level (%, start-to-trough)1 | (0.4) | (3Q26)
Unemployment rate (%, max)2 | 8.6 | (3Q26)
House price index (%, start-to-trough)1 | 0.7 | (1Q26)
Inflation rate (YoY % change)3 | 0.4 | (4Q26)
Central bank policy rate (%)3 | 0.6 | (1Q27)
Probability (%) | 10

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment in the scenario.
3 Due to the calibration of inflation and interest rates in 2Q25, the table shows
the lowest projected policy rate and year-on-year percentage change in
inflation in the scenario.

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Consensus Downside scenario 2025-2029 (as at 4Q24) (continued)
| % |
GDP level (%, start-to-trough)1 | (0.6) | (1Q26)
Unemployment rate (%, max)2 | 8.3 | (3Q25)
House price index (%, start-to-trough)1 | (0.3) | (1Q25)
Inflation rate (YoY % change, max) 3 | 2.6 | (3Q25)
Central bank policy rate (%, max)3 | 3.2 | (1Q25)
Probability (%) | 10

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment in the scenario.
3 The highest projected policy rate and year-on-year percentage change in
inflation in the scenario.
Downside 2 scenario
The Downside 2 scenario reflects management’s view of the tail of
the economic distribution. It incorporates the simultaneous
crystallisation of a number of risks that lead to a deep global
recession. The subsequent drop in demand leads to a steep fall in
commodity prices, and a rapid increase in unemployment.
The narrative features an escalation in tariff actions, resulting in a
global trade war, and further intensification of geopolitical crises. The
scenario is consistent with the US tariff rate, measured as an
effective trade-weighted average, rising to 25 per cent in 2026, and
remaining at that level in 2027.
In the scenario, oil prices trough at USD 30 per barrel.
The following table describes key macroeconomic variables for France
in the Downside 2 scenario.

Downside 2 scenario 2026-2030 (as at 4Q25)
| % |
GDP level (%, start-to-trough)1 | (6.2) | (2Q27)
Unemployment rate (%, max)2 | 10.7 | (4Q27)
House price index (%, start-to-trough)1 | (5.9) | (3Q27)
Inflation rate (YoY % change)3 | (0.6) | (4Q26)
Central bank policy rate (%)3 | 0.1 | (4Q26)
Probability (%) | 5

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment in the scenario.
3 Due to the calibration of inflation and interest rates in 2Q25, the table shows
the lowest projected policy rate and year-on-year percentage change in
inflation in the scenario.

Downside 2 scenario 2025-2029 (as at 4Q24)
| % |
GDP level (%, start-to-trough)1 | (7.9) | (2Q26)
Unemployment rate (%, max)2 | 10.4 | (1Q27)
House price index (%, start-to-trough)1 | (14.0) | (2Q27)
Inflation rate (YoY % change, max) 3 | 7.6 | (2Q25)
Central bank policy rate (%, max)3 | 4.2 | (1Q25)
Probability (%) | 5

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment in the scenario.
3 The highest projected policy rate and year-on-year percentage change in
inflation in the scenario
The following graphs show the historical and forecasted GDP growth
rate for the various economic scenarios in France.
GDP growth: Comparison between scenarios
France

Scenario weighting
Scenario weightings are calibrated to probabilities that are determined
with reference to consensus forecast probability distributions.
Management may then choose to vary weights if they assess that the
calibration lags more recent events, or does not reflects their view of
the distribution of economic and geopolitical risk. Management’s view
of the scenarios and weights takes into consideration the relationship
of the consensus scenarios to both internal and external assessments
of risk.
In the fourth quarter of 2025, forecast and distributional estimates
were assessed to have incorporated available information around
tariffs and policy uncertainties and no major events had occurred
since scenario production that changed the outlook materially.
Forecast dispersion, financial market volatility and other measures of
uncertainty remained close to their long-term average.
Consequently, there was no variation in scenario weights and they
were aligned to the calibrated probabilities of the scenarios. The
consensus Central scenario was assigned a 75 per cent probability
weighting in our major markets. The consensus Upside scenario was
assigned a 10 per cent weighting, and the consensus Downside
scenario was given 10 per cent. The Downside 2 was assigned a 5
per cent weighting.
In light of the US intervention in the political leadership and energy
assets of Venezuela during early January 2026, management
assessed the potential implications, including to oil prices, and
concluded that expected spillovers remain within the scope of
existing scenarios, including potentially significantly lower oil prices.
Therefore, no additional action was deemed necessary for economic
scenarios or weights.
The following table describes the probabilities assigned in each
scenario.

Scenario weigthings, %
4Q25 | Standard weight | France
Upside | 10.0 | 10.0
Central | 75.0 | 75.0
Downside | 10.0 | 10.0
Downside 2 | 5.0 | 5.0

4Q24 | Standard weight | France
Upside | 10.0 | 10.0
Central | 75.0 | 75.0
Downside | 10.0 | 10.0
Downside 2 | 5.0 | 5.0

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At 31 December 2025, the consensus Upside and Central scenarios
had a combined weighting of 85 per cent, unchanged from the
weightings as at 31 December 2024. Weightings assigned to
downside scenarios also remained unchanged.
Critical estimates and judgements
The calculation of ECL under IFRS 9 involves significant judgements,
assumptions and estimates at 31 December 2025. These included:
– the selection and configuration of economic scenarios, given the
constant change in economic conditions and distribution of
economic risks;
– the selection of scenarios to consider given the changing nature of
macroeconomic and geopolitical risks that the Bank and wider
economy face; and
– estimating the economic effects of those scenarios on ECL, where
similar observable historical conditions cannot be captured by the
credit risk models.
How economic scenarios are reflected in ECL
calculations
Models are used to reflect economic scenarios for the ECL estimates.
We have developed globally consistent methodologies for the
application of forward economic guidance into the calculation of ECL
for wholesale and retail credit risk.
For HSBC Continental Europe wholesale portfolios, a global
methodology is used for the estimation of the term structure of
probability of default (‘PD’) and loss given default (‘LGD’). For PDs, we
consider the correlation of forward economic guidance to default
rates for a particular industry in a country. For LGD calculations, we
consider the correlation of forward economic guidance to collateral
values and realisation rates for a particular country and industry. PDs
and LGDs are estimated for the entire term structure of each
instrument.
For impaired loans, ECL estimates are derived based on discounted
cash flow (‘DCF’) calculations for internal forward-looking scenarios
specific to individual company circumstances (Note 1.2(j)). Probability-
weighted outcomes are applied, and depending on materiality and
status of the incorporate borrower, the number of scenarios
considered will change. Where relevant for the case being assessed,
forward economic Guidance is incorporated as part of these
scenarios. LGD-driven proxy and modelled estimates are used for
certain less material cases.
For HSBC Continental Europe retail portfolios, the models are
predominantly based on historical observations and correlations with
default rates and collateral values.
For PD, the impact of economic scenarios is modelled for each
portfolio, using historical relationships between default rates and
macro-economic variables. These are included within IFRS 9 ECL
estimates using either economic response models or models that
contain internal, external and macro-economic variables. The
macroeconomic impact on PD is modelled over the period equal to
the remaining maturity of the underlying assets.
For LGD, the impact is modelled for mortgage portfolios by
forecasting future loan-to-value profiles for the remaining maturity of
the asset, using national level house price index forecasts and
applying the corresponding LGD expectation relative to the updated
forecast collateral values.
For unsecured retail portfolios historically observed recovery rates are
leveraged to measure loss. For both mortgages and unsecured loans,
a limited number of portfolios utilise a macroeconomic dependent
stressed LGD applied to the Alternative downside scenario.
Management judgemental adjustments
In the context of IFRS 9, management judgemental adjustments are
typically short-term increases or decreases to the modelled ECL at
either a customer, segment or portfolio level where management
believes ECL results do not sufficiently reflect the credit risk/expected
credit losses at the reporting date. These can relate to risks or
uncertainties that are not reflected in the models and/or to any late
breaking events with significant uncertainty, subject to management
review and challenge.
The effects of management judgemental adjustments are considered
for both gross balances and ECLs when determining whether or not a
significant increase in credit risk has occurred and is allocated to a
stage where appropriate. This is in accordance with the internal
adjustments framework.
Management judgemental adjustments are reviewed under the IFRS9
governance process. Management's review and challenge focuses on
the rationale and quantum of the adjustments and, where significant,
is subject to a further review by the second line of defence.Internal
frameworks establish the conditions where some management
judgemental adjustments should no longer be required and as such
are considered as part of the governance process. This internal
governance process allows management judgemental adjustments to
be reviewed regularly and, where possible, to mitigate these through
model recalibration or redevelopment.
Management judgemental adjustment drivers evolve as the economic
environment changes and new risks emerge. In addition to
management judgemental adjustments there are also 'Other
adjustments', which are made to address process limitations and
data/model deficiencies and can also include, where appropriate, the
impact of new models where governance has sufficiently progressed
to allow an accurate estimate of ECL allowance to be incorporated
into the total reported ECL.
For the wholesale portfolio, management judgemental adjustments
apply to the performing portfolio only as defaulted exposures are
individually assessed.
Management judgemental adjustments made in estimating the
scenario-weighted reported ECL at 31 December 2025 are set out in
the following table.

Management judgemental adjustments to ECL at 31 December 2025 1
| Retail | Wholesale 2 | Total
| €m | €m | €m
Corporate lending adjustments 3 |  | 12 | 12
Other credit judgements |  |  | —
Other adjustments 4 | — | 35 | 35
Total | — | 47 | 47

Management judgemental adjustments to ECL at 31 December 2024
| Retail | Wholesale 2 | Total
| €m | €m | €m
Corporate lending adjustments 3 |  | 30 | 30
Other credit judgements |  |  | —
Other adjustments 4 | — |  | —
Total | — | 30 | 30

1 Management judgemental adjustments presented in the table reflect
increases or (decreases) to ECL respectively.
2 The wholesale portfolio corresponds to adjustments to the performing
portfolio (stage 1 and stage 2).
3 Refers to adjustments that are applied where management believes
allowance for ECL does not sufficiently reflect the credit risk/ECL of any
given portfolio at the reporting date. These can relate to risks or
uncertainties that are not reflected in the model and/or to any late breaking
events.
4 Refers to adjustments to allowance for ECL made to address process
limitations and data/model deficiencies and can also include, where
appropriate, the impact of new models where governance has sufficiently
progressed to allow an accurate estimate of ECL allowance to be
incorporated into the total reported ECL.

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Management judgemental adjustments at 31 December 2025 are an
increase to ECL of EUR 47 million, driven by EUR 35 million
adjustment related to a LGD model limitation; and a corporate lending
adjustments aiming to reflect heightened uncertainty to exposures in
automotive and industrial sectors in Germany for EUR 12 million.
Economic scenarios sensitivity analysis of
ECL estimates
Management considered the sensitivity of the ECL outcome against
the economic forecasts as part of the ECL governance process by
recalculating the ECL under each scenario described above for
selected portfolios, applying a 100 per cent weighting to each
scenario in turn. The weighting is reflected in both the determination
of a significant increase in credit risk and the measurement of the
resulting ECL.
The ECL calculated for the Upside and Downside scenarios should
not be taken to represent the upper and lower limits of possible ECL
outcomes. The impact of defaults that might occur in the future under
different economic scenarios is captured by recalculating ECL for
loans at the balance sheet date.
There is a particularly high degree of estimation uncertainty in
numbers representing tail risk scenarios when assigned a 100 per
cent weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
ECL and financial instruments related to defaulted (stage 3) obligors.
The measurement of stage 3 ECL is relatively more sensitive to credit
factors specific to the obligor than future economic scenarios, and
therefore effect of macroeconomic factors are not necessarily the key
consideration when performing individual assessment of ECL for
obligors in default. Loans to defaulted obligors are a small portion of
the overall wholesale lending exposure, even if representing the
majority of the allowance for ECL. Due to the range and specificity of
the credit factors to which the ECL is sensitive, it is not possible to
provide a meaningful alternative sensitivity analysis for a consistent
set of risks across all defaulted obligors.
For retail mortgage exposures, the sensitivity analysis includes ECL
for defaulted obligors of loans and advances. This is because the retail
ECL for secured mortgage portfolios including loans in all stages is
sensitive to macro-economic variables.
Wholesale sensitivity
The wholesale sensitivity table present the 100 per cent weighted
results for France. These exclude portfolios held by the insurance
business and small portfolios, and as such cannot be directly
compared with personal and wholesale lending presented in other
credit risk tables. In the wholesale analysis, the comparative period
results for Downside 2 scenarios are also not directly comparable
with the current period, because they reflect different risks relative to
the consensus scenarios for the period end.
The wholesale sensitivity analysis is stated inclusive of management
judgmental adjustments, as appropriate to each scenario.
For wholesale portfolios, the gross carrying amount of financial
instruments are the same under each scenario. For exposures with
similar risk profile and product characteristics, the sensitivity impact is
therefore largely the result of changes in macroeconomic
assumptions.

IFRS9 ECL sensitivity to future economic conditions 1,2,3
ECL of loans and advances to customers | At 31 Dec 2025 | At 31 Dec 2024
€m | €m
Reported ECL | 104 | 77
Consensus Scenarios |  |
Central scenario ECL | 102 | 76
Upside scenario ECL | 89 | 67
Downside scenario ECL | 120 | 92
Downside 2 scenario ECL | 164 | 120
Corporate and commercial and NBFIs 1,2,3 | 169,775 | 175,906

1 ECL sensitivity includes off-balance sheet financial instruments. These are
subject to significant measurement uncertainty.
2 Includes low credit-risk financial instruments such as debt instruments at
FVOCI, which have high carrying amounts but low ECL under all the above
scenarios.
3 Excludes defaulted obligors.
Reconciliation of changes in gross carrying/
nominal amount and allowances for loans
and advances to banks and customers
including loan commitments and financial
guarantees
The following disclosure provides a reconciliation of the Group’s gross
carrying/nominal amount and allowances for loans and advances to
banks and customers including loan commitments and financial
guarantees. The transfers of financial instruments represents the
impact of stage transfers upon the gross carrying/nominal amount and
associated allowance for ECL.
In addition, a reconciliation by stage of the group’s gross carrying
amount and allowances for loans and advances to banks and
customers and a reconciliation by stage of the group’s nominal
amount and allowances for loan commitments and financial
guarantees were included in this section following the adoption of the
recommendations of the Disclosures on Expected Credit Losses
('DECL') Taskforce's third report.
Movements are calculated on a quarterly basis and therefore fully
capture stage movements between quarters. If movements were
calculated on a year-to-date basis they would only reflect the opening
and closing position of the financial instrument.
The transfers of financial instruments represent the impact of stage
transfers upon the gross carrying/nominal amount and associated
allowance for ECL.
The net remeasurement of ECL arising from transfer of stage
represents the increase or decrease due to these transfers, for
example, moving from a 12-month (stage 1) to a lifetime (stage 2)
ECL measurement basis. Net remeasurement excludes the
underlying ‘CRR’/PD movements of the financial instruments
transferring stage. This is captured, along with other credit quality
movements in the ‘changes in risk parameters – credit quality’ line
item.
Changes in 'Net new and further lending/repayments' represents the
impact from volume movements within the group’s lending portfolio
and includes ‘New financial assets originated or purchased’, ‘assets
derecognised (including final repayments)’ and ‘changes to risk
parameters – further lending/repayment’.

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Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2025 | 118,927 | (51) | 8,244 | (101) | 1,786 | (376) | 1 | — | 128,958 | (528)
Transfers of financial instruments | (882) | (28) | 518 | 46 | 364 | (18) | — | — | — | —
– Transfers from Stage 1 to Stage 2 | (7,293) | 7 | 7,293 | (7) | — | — | — | — | — | —
– Transfers from Stage 2 to Stage 1 | 6,533 | (35) | (6,533) | 35 | — | — | — | — | — | —
– Transfers to Stage 3 | (252) | — | (475) | 22 | 727 | (22) | — | — | — | —
– Transfers from Stage 3 | 130 | — | 233 | (4) | (363) | 4 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 27 | — | (22) | — | — | — | — | — | 5
New financial assets originated or purchased | 22,176 | (20) | — | — | — | — | — | — | 22,176 | (20)
Assets derecognised (including final repayments) | (6,810) | 1 | (701) | 3 | (160) | 28 | — | — | (7,671) | 32
Changes to risk parameters – further lending/repayments | (13,157) | 12 | (961) | 30 | (398) | 12 | — | — | (14,516) | 54
Changes to risk parameters – credit quality | — | (9) | — | (71) | — | (179) | — | — | — | (259)
Changes to model used for ECL calculation | — | 4 | — | 23 | — | — | — | — | — | 27
Assets written off | — | — | — | — | (73) | 73 | — | — | (73) | 73
Credit related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | 14 | — | (4) | — | — | — | — | — | 10 | —
Others | (6,480) | 3 | (230) | 3 | (17) | (7) | — | — | (6,727) | (1)
Assets classified as held for sale 2 | (828) | — | (2) | — | — | — | — | — | (830) | —
At 31 Dec 2025 | 112,960 | (61) | 6,864 | (89) | 1,502 | (467) | 1 | — | 121,327 | (617)
ECL release/(charge) for the period |  | 15 |  | (37) |  | (139) |  | — |  | (161)
Recoveries |  |  |  |  |  |  |  |  |  | 6
Others |  |  |  |  |  |  |  |  |  | (11)
Total ECL release/(charge) for the period |  |  |  |  |  |  |  |  |  | (166)

| At 31 Dec 2025 | 12 months ended 31 Dec 2025
| Gross carrying/ nominal amount | Provision for ECL | ECL release/ (charge)
| €m | €m | €m
As above | 121,327 | (617) | (166)
Other financial assets measured at amortised cost | 107,297 | — | —
Assets held for sale 3 | 315 | — | —
Non-trading reverse purchase agreement commitments | 51,063 | — | —
Performance and other guarantees not considered for IFRS 9 | — | — | 1
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement | 280,002 | (617) | (165)
Debt instruments measured at FVOCI | 19,833 | (3) | (1)
Total Provision for ECL/total income statement ECL charge for the period | 299,835 | (620) | (166)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes planned sale of custodian business in Germany.
3 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held fo r sale’ on page 161.

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Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2024 | 113,743 | (61) | 8,206 | (91) | 1,889 | (637) | 7 | — | 123,845 | (789)
Transfers of financial instruments | (680) | (24) | 301 | 28 | 380 | (4) | — | — | 1 | —
– Transfers from Stage 1 to Stage 2 | (5,036) | 6 | 5,036 | (6) | — | — | — | — | — | —
– Transfers from Stage 2 to Stage 1 | 4,346 | (28) | (4,346) | 28 | — | — | — | — | — | —
– Transfers to Stage 3 | (99) | — | (570) | 8 | 670 | (8) | — | — | 1 | —
– Transfers from Stage 3 | 109 | (2) | 181 | (2) | (290) | 4 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 18 | — | (18) | — | — | — | — | — | —
New financial assets originated or purchased | 32,039 | (31) | — | — | — | — | — | — | 32,039 | (31)
Assets derecognised (including final repayments) | (16,222) | 5 | (1,376) | 8 | (439) | 143 | — | — | (18,037) | 156
Changes to risk parameters – further lending/repayments | (9,722) | 28 | 1,131 | (20) | 303 | 113 | (6) | — | (8,294) | 121
Changes to risk parameters – credit quality | — | 15 | — | — | — | (357) | — | — | — | (342)
Changes to model used for ECL calculation | — | (3) | — | (7) | — | — | — | — | — | (10)
Assets written off | — | — | — | — | (224) | 224 | — | — | (224) | 224
Credit related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | 9 | — | 5 | — | (2) | — | — | — | 12 | —
Others | 179 | 2 | (6) | (1) | (121) | 142 | — | — | 52 | 143
Assets classified as held for sale 2 | (419) | — | (17) | — | — | — | — | — | (436) | —
At 31 Dec 2024 | 118,927 | (51) | 8,244 | (101) | 1,786 | (376) | 1 | — | 128,958 | (528)
ECL release/(charge) for the period |  | 32 |  | (37) |  | (101) |  | — |  | (106)
Recoveries |  |  |  |  |  |  |  |  |  | —
Others | — | — | — | — | — | — | — | — | — | 18
Total ECL release/(charge) for the period |  |  |  |  |  |  |  |  |  | (88)

| At 31 Dec 2024 | 12 months ended 31 Dec 2024
| Gross carrying/ nominal amount | Provision for ECL | ECL release/ (charge)
| €m | €m | €m
As above | 128,958 | (528) | (88)
Other financial assets measured at amortised cost | 95,233 | — | —
Assets held for sale 3 | 2,475 | — | —
Non-trading reverse purchase agreement commitments | 35,127 | — | —
Performance and other guarantees not considered for IFRS 9 | — | — | (3)
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/ Summary consolidated income statement | 261,793 | (528) | (91)
Debt instruments measured at FVOCI 4 | 25,567 | (5) | —
Total Provision for ECL/total income statement ECL charge for the period | 287,360 | (533) | (91)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes planned sale of private banking business in Germany and life insurance business i n France.
3 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 161.
4 Includes EUR 8.2 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.

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Credit impaired loans
HSBC determines that a financial instrument is credit-impaired and in
Stage 3 by considering relevant objective evidence, primarily whether:
– contractual payments of either principal or interest are past due for
more than 90 days; and
– there are other indications that the borrower is unlikely to pay such
as that a concession has been granted to the borrower for economic
or legal reasons relating to the borrower’s financial condition; and
– the loan is otherwise considered to be in default. If such
unlikeliness to pay is not identified at an earlier stage, it is deemed
to occur when an exposure is 90 days past due. Therefore, the
definitions of credit-impaired and default are aligned as far as
possible so that Stage 3 represents all loans which are considered
defaulted or otherwise credit-impaired.
Forborne loans and forbearance
A range of forbearance strategies is employed in order to improve the
management of customer relationships by avoiding default, of the
customer where possible or the calling of guarantees obtained whilst
maximising the recoveries of the amounts due. They include
extended payment terms, a reduction in interest or principal
repayments, approved external debt management plans, debt
consolidations, the deferral of foreclosures and other forms of loan
modifications and re-ageing.
HSBC Continental Europe’s policies and practices are based on
criteria which seek to enable wherever possible that the repayment is
likely to continue. These typically involve the granting of revised loan
terms and conditions.
Loan forbearance is only granted in situations where the customer
has showed a willingness to repay their loan and is expected to be
able to meet the revised obligations.
The contractual terms of a loan may be modified for a number of
reasons, including changes in market conditions, customer retention
and other factors not related to the current or potential credit
deterioration of a customer. ‘Forbearance’ describes concessions
made on the contractual terms of a loan in response to an obligor’s
financial difficulties. We classify and report loans on which such
concessions have been granted as ‘forborne loans' when their
contractual payment terms have been modified as a result of serious
concerns on the capacity of the borrower to repay their contractual
outstanding.
Identifying forborne loans
Concessions, on loans made to customers, which do not affect the
payment structure or basis of repayment, such as temporary or
permanent waivers granted by the bank to take advantage of the non-
respect of financial or security covenants, do not directly provide
concessionary relief to customers in terms of their ability to service
obligations as they fall due and are therefore not included in this
classification.
For retail lending, our credit risk management policy sets out
restrictions on the number and frequency of forbearance, the
minimum period an account must have been opened before any
forbearance can be considered and the number of qualifying
payments that must be received. The application of this policy varies
according to the nature of the market, the product and the
management of customer relationships through the occurrence of
exceptional events.
Credit quality classification of forborne loans
Under IFRS, an entity is required to assess whether there is objective
evidence that financial assets are impaired at the end of each
reporting period. A loan is impaired and an impairment allowance is
recognised when there is objective evidence of a loss event that has
an effect on the cash flows of the loan which can be reliably
estimated.
A forborne loan is presented as impaired when:
– there has been a change in contractual cash flows as a result of a
concession which the lender would otherwise not consider; and
– it is probable that without the concession, the borrower would be
unable to meet contractual payment obligations in full.
This presentation applies unless the concession is insignificant and
there are no other indicators of impairment. The forborne loan will
continue to be disclosed as impaired, for at least one year and until
there is sufficient evidence to demonstrate a significant reduction in
the risk of non-payment of future cash flows, and there are no other
indicators of impairment. For loans that are assessed for impairment
on a collective basis, the evidence typically comprises a history of
payment performance against the original or revised terms, as
appropriate to the circumstances. For loans that are assessed for
impairment on an individual basis, all available evidence is assessed
on a case-by-case basis.
For retail lending the minimum period of payment performance
required depends on the nature of loans in the portfolio, but is
typically not less than 12 months. Where portfolios have more
significant levels of forbearance activity the minimum repayment
performance period required may be substantially more.
Forborne loans and recognition of impairment allowances
For retail lending, forborne loans are segregated from other parts of
the loan portfolio for collective impairment assessment to reflect the
higher rates of losses often encountered in these segments.
In the corporate and commercial sectors, forborne loans are typically
assessed individually. Credit risk ratings are intrinsic to the
impairment assessment. A distressed restructuring is classified as an
impaired loan. The individual impairment assessment takes into
account the higher risk of the non-payment of future cash flows
inherent in forborne loans.

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Forborne loans and advances to customers at amortised costs by stage allocation
| Performing Forborne | Non-Performing Forborne | Total
| Stage 1 | Stage 2 | Stage 3 | POCI |
| €m | €m | €m | €m | €m
Gross carrying amount |  |  |  |  |
Personal | — | 10 | 14 | — | 24
– first lien residential mortgages | — | 10 | 14 | — | 24
– guaranteed loans in respect of residential property | — | — | — | — | —
– other personal lending which is secured | — | — | — | — | —
Wholesale | — | 889 | 757 | — | 1,646
– corporate and commercial | — | 869 | 754 | — | 1,623
– non-bank financial institutions | — | 20 | 3 | — | 23
At 31 Dec 2025 | — | 899 | 771 | — | 1,670
Provision for ECL |  |  |  |  |
Personal | — | — | (1) | — | (1)
– first lien residential mortgages | — | — | (1) | — | (1)
– guaranteed loans in respect of residential property | — | — | — | — | —
– other personal lending which is secured | — | — | — | — | —
Wholesale | — | (25) | (217) | — | (242)
– corporate and commercial | — | (25) | (217) | — | (242)
– non-bank financial institutions | — | — | — | — | —
At 31 Dec 2025 | — | (25) | (218) | — | (243)

Gross carrying amount |  |  |  |  |
Personal | — | 61 | 22 | — | 83
– first lien residential mortgages | — | 29 | 17 | — | 46
– guaranteed loans in respect of residential property | — | 32 | 5 | — | 37
– other personal lending which is secured | — | — | — | — | —
Wholesale | — | 1,357 | 1,034 | — | 2,391
– corporate and commercial | — | 1,352 | 1,030 | — | 2,382
– non-bank financial institutions | — | 5 | 4 | — | 9
At 31 Dec 2024 | — | 1,418 | 1,056 | — | 2,474
Provision for ECL |  |  |  |  | —
Personal | — | (2) | (3) | — | (5)
– first lien residential mortgages | — | (1) | (2) | — | (3)
– guaranteed loans in respect of residential property | — | (1) | (1) | — | (2)
– other personal lending which is secured | — | — | — | — | —
Wholesale | — | (30) | (186) | — | (216)
– corporate and commercial | — | (30) | (186) | — | (216)
– non-bank financial institutions | — | — | — | — | —
At 31 Dec 2024 | — | (32) | (189) | — | (221)

Wholesale lending
This section presents further disclosures related to wholesale lending.
It provides details of the major countries, industries and customer
classification that are driving the change observed in wholesale loans
and advances to banks and customers.
Further granularity is also provided by stage, with data for our main
countries presented for gross loans and advances to banks and
customers, loan and other credit-related commitments and financial
guarantees.
The table below provides a breakdown by industry sector and stage of
the group’s gross carrying amount and allowances for ECL for
wholesale loans and advances to banks and customers.
Counterparties or exposures are classified when presenting
comparable economic characteristics, or engaged in similar activities
so that their collective ability to meet contractual obligations is
uniformly affected by changes in economic, political or other
conditions. Therefore, the industry classification does not adhere to
Nomenclature des Activités Économiques dans la Communauté
Européenne (‘NACE’), which is applicable to other financial regulatory
reporting.

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Total wholesale lending for loans and advances to banks and customers by stage distribution |
| Gross carrying amount |  | Provision for ECL |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Corporate and commercial | 26,010 | 3,078 | 1,257 | 1 | 30,346 | (36) | (65) | (415) | — | (516)
– Industrial | 6,891 | 770 | 299 | — | 7,960 | (8) | (13) | (107) | — | (128)
– Commercial, international trade | 13,546 | 1,959 | 501 | 1 | 16,007 | (19) | (44) | (199) | — | (262)
– Construction and real estate | 4,099 | 286 | 388 | — | 4,773 | (6) | (8) | (76) | — | (90)
– Governments | 748 | 28 | — | — | 776 | — | — | — | — | —
– Others | 726 | 35 | 69 | — | 830 | (3) | — | (33) | — | (36)
Non-bank financial institutions | 9,634 | 617 | 38 | — | 10,289 | (5) | (3) | (18) | — | (26)
Loans and advances to banks | 5,691 | 24 | — | — | 5,715 | — | — | — | — | —
At 31 Dec 2025 | 41,335 | 3,719 | 1,295 | 1 | 46,350 | (41) | (68) | (433) | — | (542)
By geography |  |  |  |  |  |  |  |  |  |
HSBC Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 30,497 | 2,439 | 681 | 1 | 33,618 | (32) | (53) | (262) | — | (347)
– of which: Germany | 4,387 | 772 | 488 | — | 5,647 | (3) | (9) | (138) | — | (150)
– of which: Other Countries | 6,451 | 508 | 126 | — | 7,085 | (6) | (6) | (33) | — | (45)

Corporate and commercial | 28,015 | 4,226 | 1,495 | 1 | 33,737 | (34) | (74) | (324) | — | (432)
– Industrial | 7,421 | 741 | 470 | — | 8,632 | (7) | (30) | (56) | — | (93)
– Commercial, international trade | 14,415 | 2,878 | 788 | 1 | 18,082 | (19) | (35) | (234) | — | (288)
– Construction and real estate | 4,159 | 342 | 229 | — | 4,730 | (6) | (8) | (31) | — | (45)
– Governments | 1,084 | 38 | — | — | 1,122 | — | — | — | — | —
– Others | 936 | 227 | 8 | — | 1,171 | (2) | (1) | (3) | — | (6)
Non-bank financial institutions | 7,716 | 75 | 9 | — | 7,800 | (3) | (1) | (6) | — | (10)
Loans and advances to banks | 5,679 | 25 | — | — | 5,704 | (1) | — | — | — | (1)
At 31 Dec 2024 | 41,410 | 4,326 | 1,504 | 1 | 47,241 | (38) | (75) | (330) | — | (443)
By geography |  |  |  |  |  |  |  |  |  |
HSBC Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 30,631 | 3,147 | 1,030 | 1 | 34,809 | (24) | (38) | (185) | — | (247)
– of which: Germany | 5,770 | 872 | 355 | — | 6,997 | (4) | (35) | (109) | — | (148)
– of which: Other Countries | 5,009 | 307 | 119 | — | 5,435 | (10) | (2) | (36) | — | (48)

Total wholesale lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution |
| Nominal amount | Provision for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Corporate and commercial | 53,908 | 2,749 | 142 | — | 56,799 | (14) | (17) | (13) | — | (44)
Financial | 65,879 | 258 | — | — | 66,137 | (2) | (1) | — | — | (3)
At 31 Dec 2025 | 119,787 | 3,007 | 142 | — | 122,936 | (16) | (18) | (13) | — | (47)
By geography |  |  |  |  |  |  |  |  |  |
HSBC Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 106,108 | 1,397 | 59 | — | 107,564 | (11) | (4) | (13) | — | (28)
– of which: Germany | 10,302 | 1,449 | 81 | — | 11,832 | (5) | (10) | — | — | (15)
– of which: Other Countries | 3,377 | 161 | 2 | — | 3,540 | — | (4) | — | — | (4)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

Total wholesale lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution
| Nominal amount | Provision for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Corporate and commercial | 51,231 | 3,591 | 174 | — | 54,996 | (9) | (16) | (14) | — | (39)
Financial | 51,227 | 33 | — | — | 51,260 | (1) | — | — | — | (1)
At 31 Dec 2024 | 102,458 | 3,624 | 174 | — | 106,256 | (10) | (16) | (14) | — | (40)
By geography |  |  |  |  |  |  |  |  |  |
HSBC Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 89,808 | 2,362 | 69 | — | 92,239 | (5) | (5) | (11) | — | (21)
– of which: Germany | 9,857 | 838 | 89 | — | 10,784 | (4) | (9) | — | — | (13)
– of which: Other Countries | 2,793 | 424 | 16 | — | 3,233 | (1) | (2) | (3) | — | (6)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

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Wholesale lending – other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level of collateral by stage
| Gross carrying/nominal amount | ECL coverage
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | % | % | % | % | %
Not collateralised | 93,560 | 5,166 | 841 | 1 | 99,568 | — | 1.3 | 47.6 | — | 0.5
Fully collateralised by LTV ratio | 7,847 | 912 | 84 | — | 8,843 | 0.1 | 0.3 | 9.5 | — | 0.2
– less than 50% | 3,882 | 473 | 75 | — | 4,430 | 0.1 | 0.4 | 8.0 | — | 0.3
– 51% to 75% | 1,772 | 137 | 5 | — | 1,914 | 0.1 | 0.7 | 20.0 | — | 0.2
– 76% to 90% | 427 | 61 | 1 | — | 489 | 0.2 | — | 100.0 | — | 0.4
– 91% to 100% | 1,766 | 241 | 3 | — | 2,010 | 0.1 | — | — | — | —
Partially collateralised (A): LTV > 100% | 4,872 | 715 | 138 | — | 5,725 | — | 1.3 | 13.0 | — | 0.5
– collateral value on A | 3,547 | 446 | 57 | — | 4,050 |  |  |  |  |
Total at 31 Dec 2025 | 106,279 | 6,793 | 1,063 | 1 | 114,136 | 0.1 | 1.1 | 40.1 | — | 0.5
of which: France |  |  |  |  |  |  |  |  |  |
Not collateralised | 74,296 | 2,680 | 414 | 1 | 77,391 | — | 1.9 | 60.9 | — | 0.4
Fully collateralised by LTV ratio | 3,938 | 576 | 4 | — | 4,518 | 0.1 | 0.3 | 25.0 | — | 0.1
– less than 50% | 2,061 | 463 | 2 | — | 2,526 | — | 0.2 | 50.0 | — | 0.1
– 51% to 75% | 1,072 | 92 | 1 | — | 1,165 | 0.1 | 1.1 | — | — | 0.2
– 76% to 90% | 270 | 19 | 1 | — | 290 | — | — | — | — | —
– 91% to 100% | 535 | 2 | — | — | 537 | — | — | — | — | —
Partially collateralised (B): LTV > 100% | 3,553 | 347 | 87 | — | 3,987 | 0.1 | 0.6 | 12.6 | — | 0.4
– collateral value on B | 2,288 | 147 | 55 | — | 2,490 |  |  |  |  |
Total France at 31 Dec 2025 | 81,787 | 3,603 | 505 | 1 | 85,896 | 0.1 | 1.5 | 52.3 | — | 0.4
Not collateralised | 90,322 | 6,197 | 754 | 1 | 97,274 | — | 1.0 | 35.2 | 0.1 | 0.4
Fully collateralised by LTV ratio | 7,622 | 702 | 128 | — | 8,452 | 0.1 | 1.0 | 7.8 | — | 0.3
– less than 50% | 3,696 | 250 | 20 | — | 3,966 | 0.1 | 0.8 | 22.3 | — | 0.3
– 51% to 75% | 1,695 | 60 | 15 | — | 1,770 | 0.1 | 1.3 | 27.4 | — | 0.4
– 76% to 90% | 760 | 38 | 3 | — | 801 | 0.2 | 0.8 | 47.9 | — | 0.4
– 91% to 100% | 1,471 | 354 | 90 | — | 1,915 | 0.1 | 1.1 | 0.1 | — | 0.3
Partially collateralised (A): LTV > 100% | 4,679 | 908 | 559 | — | 6,146 | — | 1.8 | 6.2 | — | 0.9
– collateral value on A | 3,736 | 506 | 174 | — | 4,416 | — | — | — | — | —
Total at 31 Dec 2024 | 102,623 | 7,807 | 1,441 | 1 | 111,872 | — | 1.1 | 21.5 | 0.1 | 0.4
of which: France |  |  |  |  |  |  |  |  |  |
Not collateralised | 70,059 | 4,247 | 384 | 1 | 74,691 | — | 0.8 | 38.5 | 0.1 | 0.3
Fully collateralised by LTV ratio | 4,148 | 207 | 100 | — | 4,455 | — | 0.8 | 2.2 | — | 0.1
– less than 50% | 2,303 | 129 | 4 | — | 2,436 | — | 0.5 | 16.0 | — | 0.1
– 51% to 75% | 1,254 | 54 | 5 | — | 1,313 | 0.1 | 1.1 | 13.2 | — | 0.2
– 76% to 90% | 287 | 18 | 2 | — | 307 | 0.1 | 1.6 | 41.8 | — | 0.5
– 91% to 100% | 304 | 6 | 89 | — | 399 | — | 1.9 | — | — | —
Partially collateralised (B): LTV > 100% | 3,455 | 778 | 439 | — | 4,672 | — | 0.3 | 3.8 | — | 0.4
– collateral value on B | 2,707 | 477 | 91 | — | 3,275 |  |  |  |  |
Total France at 31 Dec 2024 | 77,662 | 5,232 | 923 | 1 | 83,818 | — | 0.7 | 18.0 | 0.1 | 0.3

Personal lending
Total personal lending
Personal lending mainly includes advances to individual customers for
asset purchases such as residential property where the loans are
secured by the assets being acquired. We also offer in Malta
consumer lending products such as overdrafts and personal loans
which are mainly unsecured.

Total personal lending for loans and advances to customers at amortised costs by stage distribution
| Gross carrying amount |  | Provision for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
First lien residential mortgages | 1,917 | 132 | 61 | — | 2,110 | (4) | (2) | (18) | — | (24)
Other personal lending | 654 | 2 | 4 | — | 660 | — | (1) | (3) | — | (4)
– second lien residential mortgages | — | — | — | — | — | — | — | — | — | —
– guaranteed loans in respect of residential property | — | — | — | — | — | — | — | — | — | —
– other personal lending which is secured | 586 | — | — | — | 586 | — | — | — | — | —
– credit cards | 24 | 1 | — | — | 25 | — | (1) | — | — | (1)
– other personal lending which is unsecured | 44 | 1 | 4 | — | 49 | — | — | (3) | — | (3)
– motor vehicle finance | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2025 | 2,571 | 134 | 65 | — | 2,770 | (4) | (3) | (21) | — | (28)

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Total personal lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution
| Gross carrying amount |  | Provision for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Personal lending |  |  |  |  |  |  |  |  |  |
At 31 Dec 2025 | 329 | 5 | — | — | 334 | — | — | — | — | —

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

Total personal lending for loans and advances to customers at amortised costs by stage distribution (continued)
| Gross carrying amount | Provision for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
First lien residential mortgages | 2,747 | 121 | 77 | — | 2,945 | (2) | (8) | (22) | — | (32)
Other personal lending | 7,093 | 169 | 31 | — | 7,293 | (1) | (2) | (10) | — | (13)
– second lien residential mortgages | — | — | — | — | — | — | — | — | — | —
– guaranteed loans in respect of residential property | 6,142 | 167 | 17 | — | 6,326 | (1) | (2) | (3) | — | (6)
– other personal lending which is secured | 873 | — | 6 | — | 879 | — | — | — | — | —
– credit cards | 25 | 1 | — | — | 26 | — | — | — | — | —
– other personal lending which is unsecured | 53 | 1 | 8 | — | 62 | — | — | (7) | — | (7)
– motor vehicle finance | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 9,840 | 290 | 108 | — | 10,238 | (3) | (10) | (32) | — | (45)

Total personal lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution
| Gross carrying amount |  | Provision for ECL
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Personal lending |  |  |  |  |  |  |  |  |  |
At 31 Dec 2024 | 346 | 4 | — | — | 350 | — | — | — | — | —

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
Mortgage lending
We offer a wide range of mortgage products designed to meet
customer needs, including capital repayment, bridge loans and
regulated loans. HSBC Continental Europe has specific LTV
thresholds and debt-to-income ratios in place for this type of lending,
which are compliant with the overall Group policy, strategy and risk
appetite.
Collateral and other credit enhancements held
The most common method of mitigating credit risk for personal
lending is to take collateral. For HSBC Continental Europe a mortgage
over the property is often taken to help secure claims. Loans may also
be made against a pledge of eligible marketable securities or cash.
The tables below show residential mortgage lending including off-
balance sheet loan commitments by level of collateral. They provide a
quantification of the value of fixed charges we hold over borrowers’
specific assets in the event of the borrower failing to meet its
contractual obligations.
The LTV ratio is calculated as the gross on-balance sheet carrying
amount of the loan and any off-balance sheet loan commitment at the
balance sheet date divided by the value of collateral.
The value of mortgage collateral is updated on a monthly basis using
the notary price index (‘INSEE’). In addition professional valuations are
obtained for high value mortgage loans (>EUR 3m) annually.
Valuations of financial collateral are updated on a daily basis for those
portfolios held by HSBC Continental Europe and on annual basis for
those held externally.
The collateral valuation excludes any cost adjustments linked to
obtaining and selling the collateral and, in particular, loans shown as
not collateralised or partly collateralised may also benefit from other
forms of credit mitigants.

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Personal lending – residential mortgage loans including loan commitments by level of collateral by stage
| Gross carrying/nominal amount | ECL coverage
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total
| €m | €m | €m | €m | % | % | % | %
Fully collateralised by LTV ratio | 2,047 | 136 | 46 | 2,229 | 0.1 | 1.5 | 19.6 | 0.6
– less than 50% | 1,119 | 92 | 36 | 1,247 | 0.1 | 1.1 | 11.1 | 0.5
– 51% to 70% | 751 | 35 | 7 | 793 | 0.3 | 2.9 | 42.9 | 0.8
– 71% to 80% | 133 | 8 | 2 | 143 | — | — | 50.0 | 0.7
– 81% to 90% | 37 | 1 | — | 38 | — | — | — | —
– 91% to 100% | 7 | — | 1 | 8 | — | — | 100.0 | 12.5
Partially collateralised (A): LTV > 100% | — | — | 14 | 14 | — | — | 64.3 | 64.3
LTV ratio: |  |  |  |  |  |  |  |
– 101% to 110% | — | — | — | — | — | — | — | —
– 111% to 120% | — | — | — | — | — | — | — | —
– greater than 120% | — | — | 14 | 14 | — | — | 64.3 | 64.3
– collateral value on A | — | — | — | — | — | — | — | —
Total at 31 Dec 2025 | 2,047 | 136 | 60 | 2,243 | 0.1 | 1.5 | 30.0 | 1.0
Fully collateralised by LTV ratio | 2,860 | 124 | 61 | 3,045 | 0.1 | 5.0 | 18.7 | 0.7
– less than 50% | 1,520 | 87 | 37 | 1,644 | — | 4.7 | 14.1 | 0.6
– 51% to 70% | 1,066 | 30 | 21 | 1,117 | 0.1 | 4.6 | 21.3 | 0.7
– 71% to 80% | 203 | 6 | 2 | 211 | 0.1 | 9.2 | 44.5 | 0.7
– 81% to 90% | 65 | 1 | — | 66 | 0.1 | 13.3 | — | 0.5
– 91% to 100% | 6 | — | 1 | 7 | 0.6 | — | 89.1 | 13.5
Partially collateralised (A): LTV > 100% | 11 | — | 15 | 26 | 0.1 | — | 66.5 | 38.6
LTV ratio: |  |  |  |  |  |  |  |
– 101% to 110% | 2 | — | — | 2 | 0.1 | — | — | 2.3
– 111% to 120% | 2 | — | — | 2 | 0.2 | — | — | 0.2
– greater than 120% | 7 | — | 15 | 22 | 0.1 | — | 66.9 | 45.4
– collateral value on A | 6 | — | — | 6 | — | — | — | —
Total at 31 Dec 2024 | 2,871 | 124 | 76 | 3,071 | 0.1 | 5.0 | 28.1 | 1.0

Financial assets at amortised cost classified as "Assets held for sale 1"
| Gross carrying amount | Provision for ECL | Net
| €m | €m | €m
Loans and advances to customers at amortised cost | 294 | — | 294
– stage 1 | 294 | — | 294
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
Loans and advances to banks at amortised cost | 13 | — | 13
– stage 1 | 13 | — | 13
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
Other financial assets measured at amortised cost | 8 | — | 8
– stage 1 | 8 | — | 8
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
At 31 Dec 2025 | 315 | — | 315

1 Includes planned sale of custodian business and fund administration services in Germany.

Financial assets at amortised cost classified as "Assets held for sale 1"
| Gross carrying amount | Provision for ECL | Net
| €m | €m | €m
Loans and advances to customers at amortised cost | 298 | — | 298
– stage 1 | 281 | — | 281
– stage 2 | 17 | — | 17
– stage 3 | — | — | —
– POCI | — | — | —
Loans and advances to banks at amortised cost | 139 | — | 139
– stage 1 | 139 | — | 139
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
Other financial assets measured at amortised cost | 2,038 | — | 2,038
– stage 1 | 2,038 | — | 2,038
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
At 31 Dec 2024 | 2,475 | — | 2,475

1 Includes planned sale of private banking business in Germany and life insurance business i n France.

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Counterparty credit risk
Overview
Credit risk is the risk of financial loss if a customer or counterparty
fails to meet an obligation under a contract. Whenever there is a
chance that a counterparty will not pay an amount of money owed,
live up to a financial commitment or honour a claim, there is credit
risk. Many types of transactions present credit risk, counterparty
credit risk tackles the case of an indirect exposure via an Over-The-
Counter or Secured Financing Transaction ('OTC/SFT'): both parties
commit to make future payments, the amounts of which are
dependent on the market value of an underlying product (for example
the exchange rate between the U.S. dollar and the Japanese yen).
Key developments in 2025
There were no material changes to current policies and practices for
management of counterparty credit risk in 2025.
Governance and Structure
Traded Risk has a specific team responsible for the measurement,
control and management of counterparty risk primarily as a Second
Line of Defence function. Traded Risk reports to the Chief Risk
Officer of HSBC Continental Europe.
The risk appetite framework for counterparty credit risk relies on two
types of limits:
– Counterparty-level limits which are approved by the Wholesale
Credit Officers; and
– Portfolio level limits which are established to monitor risk at an
aggregate level. HSBC Continental Europe has portfolio limits on
Wrong Way Risk, CVA, Financing and CCPs related metrics.
Key risk management processes
The Traded Credit Risk Management Meeting is the backbone of
CCR’s governance structure. During this monthly meeting, the
different CCR events per client and portfolio are discussed and
reviewed for further escalation to the HSBC Continental Europe RMM
as necessary. Outstanding issues are also reported to sales/
relationship managers, credit officers and to the Traded Risk Europe/
Group representatives.

Market risk
Overview
Market risk is the risk that movements in market factors, including
foreign exchange rates, interest rates, credit spreads and equity
prices will reduce HSBC Continental Europe’s income or the value of
its portfolios.
Exposure to market risk is separated into two portfolios.
Trading portfolios comprise positions arising from market-making and
warehousing of customer-derived positions.
Non-trading portfolios including Markets Treasury comprise positions
that primarily arise from the interest rate risk management of
commercial banking assets and liabilities, and financial investments
designated as Held-To-Collect-and-Sale (‘HTCS’).
Key developments in 2025
There were no material changes to current policies and practices for
the management of market risk in 2025.
Market risk governance
The following diagram summarizes the main business areas where
trading and non-trading market risks reside, and the market risk
measures used to monitor and limit exposures.

Risk types | Trading Risk | Non-trading Risk
– Foreign exchange – Interest rates – Credit spreads – Equities | – Interest rates – Credit spreads – Foreign exchange
Risk measure | Value at Risk | Sensitivity | Stress testing | Value at Risk | Sensitivity | Stress testing

Where appropriate, similar risk management policies and
measurement techniques are applied to both trading and non-trading
portfolios. The objective is to manage and control market risk
exposures to optimise return on risk while maintaining a market
profile consistent with the established risk appetite.
At the HSBC Group level, market risk is managed and controlled
through limits approved by the Risk Management Meeting for HSBC
Holdings plc. These limits are allocated across business lines and to
the HSBC Group’s legal entities. Each major operating entity,
including HSBC Continental Europe, has an independent market risk
management and control sub-function which is responsible for
measuring market risk exposures, monitoring and reporting these
exposures against the prescribed limits on a daily basis.
For HSBC Continental Europe, the Chief Risk Officer is responsible for
the management of the HSBC Continental Europe market risks limits,
the business lines it operates as well as its subsidiaries. The risks
mandates are also approved by the Chief Risk Officer within the risk
appetite limits approved by the HSBC Continental Europe Board.
Each operating entity is required to assess the market risks arising in
its business and to transfer them either to its local Markets and
Securities Services or Markets Treasury unit for management, or to
separate books managed under the supervision of the Asset Liability
Committees. The Traded Risk function enforces the controls around
trading in permissible instruments approved for each site as well as
following completion of the new product approval process. Traded
Risk also restricts trading in the more complex derivative products to
offices with appropriate levels of product expertise and robust control
systems.
Market risk in 2025
Despite rising uncertainties and heightening geopolitical tensions
around the globe, European financial markets remained resilient in
2025. The widening gap between European Union and United States
political narratives jolted markets throughout the first semester and
triggered spikes of volatility. Both Germany’s rule breaking
announcement of an unprecedent spending package and US tariffs
drove the trends over the period. The rising mistrust toward United
State weighted on American assets with the dollar depreciating by
about 15 per cent against the euro and only slightly recovered by year
end. Volatility softened during the second semester. The trend was
driven by the artificial intelligence momentum, fuelling a rally on main
equity indexes. While European equity indexes outperformed United
States ones in the first half of the year, the trends reversed in the
next six months. Main indexes are up from 20 per cent to 25 per cent
over the year. European corporate also benefited from improving
credit conditions with spreads nearing five years low. The political
context in Europe, with fragile governments in France and Germany,
further fuelled the fiscal narrative. Sovereign spreads on historical
European core countries underperformed and widened over the

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period. In that context, the ECB kept pace of its easing monetary
policy with four additional cuts. The deposit rate ends the year at 2
per cent with an inflation close to the 2 per cent target.
Market risk measures
Market risk monitoring system
HSBC Continental Europe uses a range of tools to monitor and limit
market risk exposures including sensitivity analysis, Value at Risk
('VAR') and stress testing. The objective is to manage and control
market risk exposures while maintaining a market profile consistent
with our risk appetite.
Sensitivity analysis
Sensitivity analysis measures the impact of individual market factor
movements on specific instruments or portfolios, including interest
rates, foreign exchange rates and equity prices, such as the effect of
a one basis point change in yield. HSBC uses sensitivity measures to
monitor the market risk positions within each risk type. Sensitivity
limits are set for portfolios, products and risk types, with the depth of
the market being one of the principal factors in determining the level
of limits set.
Value at risk
VaR is a technique that estimates the potential losses on risk
positions as a result of movements in market rates and prices over a
specified time horizon and to a given level of confidence. The use of
VaR is integrated into market risk management and is calculated for
all trading positions regardless of how HSBC Continental Europe
capitalises those exposures. Where there is not an approved internal
model, HSBC Continental Europe uses the rules prescribed by the
regulator to capitalise exposures.
In addition, HSBC Continental Europe calculates VaR for non-trading
portfolios in order to have a complete picture of risk. VaR is calculated
at a 99 per cent confidence level for a one-day holding period. Where
VaR is not explicitly computed, alternative tools like Stress Testing are
in use.
The VaR models are based predominantly on historical simulation.
These models derive plausible future scenarios from past series of
recorded market rates and prices, taking into account inter-
relationships between different markets and rates such as interest
rates and foreign exchange rates. The models also incorporate the
effect of option features on the underlying exposures.
The historical simulation models used incorporate the following
features:
– Historical market rates and prices are calculated with reference to
foreign exchange rates, interest rates, equity prices and the
associated volatilities;
– Potential market movements utilised for VaR are calculated with
reference to data from the past two years; and
– VaR measures are calculated to a 99 per cent confidence level and
use a one-day holding period.
The nature of the VaR models means that an increase in observed
market volatility will most likely lead to an increase in VaR without any
changes in the underlying positions.
Although a valuable guide to risk, VaR should always be viewed in the
context of its limitations. For example:
– Use of historical data as a proxy for estimating future events may
not encompass all potential events, particularly those which are
extreme in nature;
– Use of a holding period assumes that all positions can be liquidated
or the risks offset during that period. This may not fully reflect the
market risk arising at times of severe illiquidity, when the holding
period may be insufficient to liquidate or hedge all positions fully;
– Use of a 99 per cent confidence level by definition does not take
into account losses that might occur beyond this level of
confidence; and
– VaR is calculated on the basis of exposures outstanding at the close
of business and therefore does not necessarily reflect intra-day
exposures.
Stressed VaR
HSBC Continental Europe calculates a Stressed VaR. Like VaR, it is
calculated using historical simulations and a 99 per cent confidence
level. However, unlike VaR, Stressed VaR is based on a 10 day period
and a stressed period historical dataset. Stressed VaR can be rescaled
to a one-day equivalent holding period by dividing it by the square root
of 10.
Stress Testing
Stress testing is an important procedure that is integrated into the
market risk management toolkit to evaluate the potential impact on
portfolio values of more extreme, although plausible, events or
movements in a set of financial variables. In such scenarios, losses
can be much greater than those predicted by VaR modelling.
Market risk reverse stress tests are undertaken on the premise that
there is a fixed loss. The stress testing process identifies which
scenarios lead to this loss. The rationale behind the reverse stress
test is to understand scenarios which are beyond normal business
settings that could have contagion and systemic implications.
Stressed VaR and stress testing, together with reverse stress testing
and the management of gap risk, provide management with insights
regarding the ‘tail risk’ beyond VaR for which local appetite is limited.
Back-testing
HSBC Continental Europe routinely validates the accuracy of its VaR
models by back-testing the VaR metric against both actual and
hypothetical profit and loss. Hypothetical profit and loss exclude non-
modelled items such as fees, commissions and revenue of intra-day
transactions. The hypothetical profit and loss reflects the profit and
loss that would be realised if positions of HSBC Continental Europe
are held constant from the end of one trading day to the end of the
next. This measure of profit and loss does not align with how risk is
dynamically hedged, and is not therefore necessarily indicative of the
actual performance of the business. The number of hypothetical loss
back-testing exceptions, together with a number of other indicators, is
used to assess model performance and to consider whether
enhanced internal monitoring of a VaR model is required.
Trading portfolios
Value at risk of the trading portfolios
The majority of HSBC Continental Europe total Valu e at Risk ('VaR')
and almost all trading VaR reside in Markets and Securities Services
with an amount of EUR 3.9 million EUR as of 31 December 2025
compared with EUR 3.4 million EUR at 31 December 2024.

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HSBC Continental Europe Trading VaR by risk type
| Foreign exchange (‘FX’) and commodity | Interest rate (‘IR’) | Equity (‘EQ’) | Credit Spread (‘CS’) | Commodity | Portfolio Diversification | Total
| €m | €m | €m | €m | €m | €m | €m
Balance at 31 Dec 2025 | 0.74 | 2.61 | 1.96 | 1.33 | 0.66 | (3.40) | 3.90
Average | 0.84 | 2.54 | 2.13 | 1.20 | 0.10 | (2.72) | 4.10
Maximum | 1.68 | 4.56 | 3.24 | 1.92 | 0.66 | (3.70) | 7.03
Balance at 31 Dec 2024 | 1.36 | 2.20 | 1.91 | 0.91 | 0.37 | (3.33) | 3.41
Average | 0.78 | 4.74 | 2.35 | 1.11 | 0.07 | (3.16) | 5.88
Maximum | 1.55 | 11.11 | 4.59 | 1.86 | 0.54 | (5.33) | 12.94

HSBC Continental Europe 1D SVaR of the Trading portfolio
| €m
Average | (9.92)
Maximum | (18.51)
Minimum | (4.59)
At 31 Dec 2025 | (18.12)

Non-Trading portfolios
Non-trading VaR of HSBC Continental Europe includes the interest
rate risk of non-trading financial instruments held by the global
businesses and transferred into portfolios managed by Markets
Treasury or Asset, Liability and Capital Management functions. In
measuring, monitoring and managing risk in non-trading portfolios,
VaR is just one of the tools used. The management of interest rate
risk in the banking book is described further in ‘Non-trading interest
rate risk’ below, including the role of Markets Treasury. The local
control of market risk in the non-trading portfolios is based on
transferring the assessed market risk of non-trading assets and
liabilities created outside Markets Treasury or Markets, to the books
managed by Markets Treasury, provided the market risk can be
neutralised. The net exposure is typically managed by Markets
Treasury through the use interest rate swaps. Interest rate swaps
used by Markets Treasury are typically classified as either a fair value
hedge or a cash flow hedge and included within the local non-trading
VaR.
Any market risk that cannot be neutralised in the market is managed
by HSBC Continental Europe in segregated ALCO books.

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HSBC Continental Europe Value at Risk of the non-trading portfolio

HSBC Continental Europe Total accrual VaR by risk type
| Foreign Exchange | Interest Rate | Equity | Credit Spread | Portfolio diversification | Total
| €m | €m | €m | €m | €m | €m
Balance at 31 Dec 2025 | — | 18.68 | — | 14.74 | (5.19) | 28.22
Average | — | 11.85 | 0.53 | 15.18 | (5.55) | 22.01
Maximum | — | 20.14 | 1.34 | 17.28 | (8.63) | 29.37
Balance at 31 Dec 2024 | 0.01 | 8.22 | 0.48 | 16.41 | (4.64) | 20.49
Average | 0.01 | 9.81 | 0.34 | 13.52 | (5.51) | 18.17
Maximum | 0.17 | 14.70 | 0.62 | 20.72 | (9.15) | 24.92

Treasury risk
Overview
Treasury risk is the risk of having insufficient capital, liquidity or
funding resources to meet financial obligations and satisfy regulatory
requirements. Treasury risk also includes the risk to our earnings or
capital due to structural foreign exchange exposures and changes in
market interest rates.
Treasury risk arises from changes to the respective resources and risk
profiles driven by customer behaviour, management decisions or the
external environment.
Approach and policy
Our objective in the management of treasury risk is to maintain
appropriate levels of capital, liquidity and funding to support our
business strategy, and meet our regulatory and stress testing-related
requirements.This includes business as usual management as well as
recovery and resolution planning.
Our approach to treasury risk management is driven by our strategic
and organisational requirements, taking into account the regulatory,
economic and commercial environment. We aim to maintain a strong
capital and liquidity base to support the risks inherent in our business
in accordance with our strategy, meeting regulatory requirements at
all times.
Our policy is underpinned by our risk management framework, our
Internal Capital Adequacy Assessment Process and our Internal
Liquidity Adequacy Assessment Process. The risk framework
incorporates a number of measures aligned to our assessment of
risks for both internal and regulatory purposes.
These risks include credit, market, operational, pensions, structural
foreign exchange and interest rate risk in the banking book.
The ECB is the lead supervisor of the bank and sets the consolidated
regulatory capital requirements and receives information on the
capital and liquidity adequacy as well as on recovery planning. The
Single Resolution Board (‘SRB’) and the ACPR set the resolvability
requirements including the consolidated Minimum Required Eligible
Liabilities (‘MREL’) / Total Loss Absorbing Capacity (‘TLAC’) targets.
Governance
Capital, liquidity, interest rate risk in the banking book and non-trading
book foreign exchange risk are actively managed by the Treasury
function as the First Line of Defence. The Chief Financial Officer is
the risk owner for Treasury Risks. In this role, the Chief Financial
Officer is supported by the Asset and Liability Management
Committee. The Head of Treasury Risk Management is the
accountable Second Line of Defence risk steward for all Treasury
Risks. Ultimately, Treasury Risks are within the responsibility of the
Board and its Risk Committee.

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Capital

Key metrics (KM1) (non audited)
|  | CRR3 | CRR2
|  | At
|  | 31 Dec 2025 | 31 Dec 2024 1
|  | €m | €m
| Available own funds (amounts) |  |
1 | Common Equity Tier 1 (CET1) capital | 9,874 | 11,916
2 | Tier 1 capital | 11,116 | 13,359
3 | Total capital | 13,018 | 14,848
| Risk-weighted exposure amounts |  |
4 | Total risk exposure amount | 60,303 | 63,297
4a | Total risk exposure pre-floor | 60,303 | —
| Capital ratios (as a percentage of risk-weighted exposure amount) |  |
5 | Common Equity Tier 1 ratio (%) | 16.4 | 18.8
5b | Common Equity Tier 1 ratio considering unfloored TREA (%) | 16.4 | —
6 | Tier 1 ratio (%) | 18.4 | 21.1
6b | Tier 1 ratio considering unfloored TREA (%) | 18.4 | —
7 | Total capital ratio (%) | 21.6 | 23.5
7b | Total capital ratio considering unfloored TREA (%) | 21.6 | —
| Additional own funds requirements to address risks other than the risk of excessive leverage (as a percentage of risk-weighted exposure amount) |  |
EU 7d | Additional own funds requirements to address risks other than the risk of excessive leverage (%) | 2.8 | 3.0
EU 7e | of which: to be made up of CET1 capital (percentage points) | 1.5 | 1.7
EU 7f | of which: to be made up of Tier 1 capital (percentage points) | 2.1 | 2.3
EU 7g | Total SREP own funds requirements (%) | 10.8 | 11.0
| Combined buffer and overall capital requirement (as a percentage of risk-weighted exposure amount) |  |
8 | Capital conservation buffer (%) | 2.5 | 2.5
9 | Institution specific countercyclical capital buffer (%) | 0.9 | 0.9
EU 9a | Systemic risk buffer (%) | 0.0 | 0.0
EU 10a | Other Systemically Important Institution buffer (%) | 0.3 | 0.3
11 | Combined buffer requirement (%) | 3.7 | 3.7
EU 11a | Overall capital requirements (%) | 14.5 | 14.7
12 | CET1 available after meeting the total SREP own funds requirements (%) | 10.3 | 12.5
| Leverage ratio |  |
13 | Total exposure measure | 256,275 | 245,648
14 | Leverage ratio (%) | 4.3 | 5.4
| Additional own funds requirements to address the risk of excessive leverage (as a percentage of total exposure measure) |  |
EU 14c | Total SREP leverage ratio requirements (%) | 3.0 | 3.0
| Leverage ratio buffer and overall leverage ratio requirement (as a percentage of total exposure measure) |  |
EU 14e | Overall leverage ratio requirement (%) | 3.0 | 3.0
| Liquidity Coverage Ratio ('LCR')2 |  |
15 | Total high-quality liquid assets ('HQLA') (Weighted value-average) | 87,884 | 75,513
EU 16a | Cash outflows – Total weighted value | 91,858 | 82,826
EU 16b | Cash inflows – Total weighted value | 31,899 | 32,299
16 | Total net cash outflows (adjusted value) | 59,959 | 50,527
17 | Liquidity coverage ratio (%) | 147 | 150
| Net Stable Funding Ratio ('NSFR')2 |  |
18 | Total available stable funding | 85,358 | 86,928
19 | Total required stable funding | 52,023 | 63,448
20 | NSFR ratio (%) | 164 | 137

*The references identify the lines prescribed in the EBA template that are applicable and where there is a value.
1 Comparatives are updated to align to submissions post publication.
2 In line with CRR requirements LCR is disclosed as an average over 12 months, whereas NSFR is disclosed as at reporting date.

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Capital Management
HSBC Continental Europe’s objective in managing the Bank's capital
is to maintain appropriate levels of capital to support its business
strategy and meet regulatory requirements at all times.
HSBC Continental Europe manages its capital to ensure that it
exceeds current and expected future requirements. Throughout 2025,
HSBC Continental Europe complied with the ECB regulatory capital
adequacy requirements.
To achieve this, HSBC Continental Europe manages its capital within
the context of an annual capital plan, which is approved by the Board
and which determines the appropriate amount and mix of capital.
Complementing this capital plan regular forecasts of capital, leverage,
RWAs positions are produced throughout the year.
The policy on capital management is underpinned by the HSBC Group
capital management framework, which enables a consistent
management of the capital.
Each of HSBC Continental Europe’s subsidiaries subject to individual
regulatory capital requirements manages its own capital to support its
planned business growth and meet its local regulatory requirements.
Capital Measurement
HSBC Continental Europe is supervised by the Joint Supervisory
Team of the ECB and the ACPR. The ECB sets HSBC Continental
Europe’s capital requirements, in line with the regulatory framework.
The Basel III framework, like Basel II, is structured around three
‘pillars’: minimum capital requirements, supervisory review process
and market discipline. Basel III also introduces a number of capital
buffers, including the Capital Conservation Buffer (‘CCB’),
Countercyclical Buffer (‘CCyB’), and other systemic buffers such as
the Globally/Other Systematically Important Institutions (‘G-SII’/’O-SII’)
buffer. CRR and CRD legislations implemented Basel III in the EU.
The capital management framework defines regulatory capital and
economic capital as the two primary measures for the management
and control of capital.
Capital measures:
– Regulatory capital is the capital which HSBC Continental Europe is
required to hold in accordance with the rules established by
regulators; and
– Economic capital is the internally calculated capital requirement to
support risks to which HSBC Continental Europe is exposed and
forms a core part of the internal capital adequacy assessment
process.
Regulatory Capital
HSBC Continental Europe’s capital base is divided into three main
categories, namely Common Equity Tier 1, Additional Tier 1 and Tier
2, depending on their characteristics.
CET1 capital is the highest quality form of capital, comprising
shareholders’ equity and related non-controlling interests (subject to
limits). Under CRD/CRR various capital deductions and regulatory
adjustments are made against these items – these include deductions
for goodwill and intangible assets, deferred tax assets that rely on
future profitability as well as negative amounts resulting from the
calculation of expected loss amounts under IRB.
Additional Tier 1 capital comprises eligible non-common equity capital
securities such as Additional Tier 1 eligible subordinated debt as per
CRR, and any related share premium. Holdings of additional Tier 1
securities of financial sector entities are deducted from additional Tier
1 capital.
Tier 2 capital comprises eligible subordinated debt and any related
share premiums. Holdings of Tier 2 capital of financial sector entities
are deducted.
Regulatory Requirements
At th e end of 2025, HSBC Continental Europe is required to meet on
a consolidated basis a minimum total capital ratio of at least
14.5 per cent. This Overall Capital Requirement (‘OCR’) is composed
of the 8 per cent minimum capital in respect of article 92.1 of the
575/2013 Regulation, the 2.5 per cent for the Capital Conservation
Buffer ('CCB') in respect of article 129 of the 2013/36 Directive, the
0.9 per cent weighted Countercyclical Buffer ('CCyB'), the 0.25 per
cent Other Systematically Important Institution buffer (’O-SII‘) in force
since 1 January 2022 as per the decision from the ACPR and the 2.75
per cent Pillar 2 Requirement ('P2R').
The minimum capital requirement under Pillar 2 (‘P2R’) for HSBC
Continental Europe on a consolidated basis has been set at 2.75 per
cent. Under CRD, the P2R should be held in the form of 56.25 per
cent of CET1 and 75 per cent of Tier 1, as a minimum.
As at 31 December 2025, the requirement in respect of Common
equity tier 1 is 9.8 per cent, excluding Pillar 2 guidance (‘P2G’).
Leverage Ratio
The leverage ratio was introduced into the Basel III framework as a
non-risk-based metric, to supplement risk-based capital requirements.
It aims to constrain the build-up of excessive leverage in the banking
sector, introducing additional safeguards against model risk and
measurement errors. The Basel III leverage ratio is a volume-based
measure calculated as Tier 1 capital divided by total on- and weighted
off-balance sheet exposures, allowing the exclusions of certain
exposures and the netting of exposures on certain market
instruments.
This ratio has been implemented in the EU for reporting and
disclosure purposes and has been set as a binding requirement since
June 2021.
Pillar 3 market discipline
Pillar 3 of the Basel regulatory framework is related to market
discipline and aims to make financial services firms more transparent
by requiring publication of wide-ranging information on their risks,
capital and management. HSBC Continental Europe’s Pillar 3
Disclosure is published on HSBC’s website, www.hsbc.com, under
‘Investors’ section.
Minimum Requirement for own funds and
Eligible Liabilities (‘MREL’) – Total Loss
Absorbing Capacity (‘TLAC’)
HSBC Continental Europe became subject to MREL requirements for
the first time on 30 March 2020 following receipt of decision from the
ACPR.
Following the end of the UK withdrawal from the European Union
transition period, HSBC Continental Europe became from 1 January
2021 a material subsidiary (CRR article 4.1.135) of a third-country G-
SII and therefore bound by internal TLAC requirements (CRR article
92b). In order to meet both the internal TLAC and MREL
requirements, HSBC Continental Europe has issued internal Senior
Non-Preferred bonds.

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Overview of changes of own funds ratios

Composition of regulatory own funds (‘CC1’) (non audited) |
|  | At
|  | 31 Dec 2025 | 31 Dec 2024
Ref* |  | €m | €m
| Common equity tier 1 (‘CET1’) capital: instruments and reserves |  |
1 | Capital instruments and the related share premium accounts | 8,075 | 8,075
| – of which: share premium account | 6,747 | 6,747
2 | Retained earnings | 2,103 | 2,927
3 | Accumulated other comprehensive income (and other reserves) | 1,529 | 1,642
5 | Minority interests (amount allowed in consolidated CET1) | 77 | 103
5a | Independently reviewed interim net profits net of any foreseeable charge or dividend | — | 568
6 | Common equity tier 1 capital before regulatory adjustments | 11,128 | 13,315
EU-25a | Losses for the current financial year (negative amount) | (656) | —
27a | Other regulatory adjustments to CET1 capital (including IFRS 9 transitional adjustments when relevant) | (302) | (352)
28 | Total regulatory adjustments to Common Equity Tier 1 (‘CET1’) | (1,910) | (1,399)
29 | Common Equity Tier 1 (‘CET1’) capital | 9,874 | 11,916
36 | Additional tier 1 capital before regulatory adjustments | 1,242 | 1,443
43 | Total regulatory adjustments to Additional Tier 1 (‘AT1’) capital | — | —
44 | Additional Tier 1 (AT1) capital | 1,242 | 1,443
45 | Tier 1 capital (T1 = CET1 + AT1) | 11,116 | 13,359
51 | Tier 2 capital before regulatory adjustments | 1,901 | 1,908
55 | Direct and indirect holdings by the institution of the T2 instruments and subordinated loans of financial sector entities where the institution has a significant investment in those entities (net of eligible short positions) | — | (420)
58 | Tier 2 capital | 1,901 | 1,488
59 | Total capital (TC = T1 + T2) | 13,018 | 14,848

∗The references identify the lines prescribed in the EBA template that are applicable and where there is a value.
The main movements of the own funds are detailed on the Note 1.3 ‘Significant events during the year’ of the HSBC Continental Europe's
Universal Registration Document 2025.

RWA movement by global business by key driver (non audited)
| Total RWA
| €m
RWAs at 1 Jan 2025 | 63,297
Asset size | (1,790)
Asset quality | (917)
Model updates | 545
Methodology and policy | 3,242
Acquisitions and Disposals | (4,072)
Foreign exchange movement | (234)
Other | 232
Total RWA movement | (2,993)
RWAs at 31 Dec 2025 | 60,303
RWAs by global business |
Corporate and Institutional Banking | 53,708
International Wealth and Premier Banking | 3,764
Corporate Centre | 2,831

Leverage Ratio at 31 December (non audited)
| At
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Tier 1 Capital | 11,116 | 13,359
Leverage Exposure | 256,275 | 245,648
Leverage ratio % | 4.3 | 5.4

The Leverage exposure increased from EUR 245.6 billion to EUR 256.2 billio n, primarily driven by the expansion of the balance sheet. This
increase excludes the impact of the sale of the life insurance business which is out of scope of prudential consolidation.
Liquidity and funding risk management
Liquidity and funding risk management framework
Liquidity risk is the risk that HSBC Continental Europe does not have
sufficient financial resources to meet its obligations as they fall due,
or will have to access such resources at excessive cost. The risk
arises from mismatches in the timing of cash flows or when the
funding needed for illiquid asset positions cannot be obtained at the
expected terms as and when required.
HSBC Group has an internal liquidity and funding risk management
framework which aims to allow it to withstand liquidity stresses. It is
designed to be adaptable to changing business models, markets and
regulations. The management of liquidity and funding is undertaken in
compliance with the HSBC Group’s framework and with practices and
limits set through by the RMM and approved by the Board.

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The elements of this framework are underpinned by a robust
governance framework, the two major elements of which are ALCO
and ILAAP.
The HSBC Group’s operating entities are predominantly defined on a
country basis to reflect the local management of liquidity and funding.
In this context, liquidity and funding risk is managed by HSBC
Continental Europe on a standalone basis with no implicit reliance
assumed on any other Group entity unless pre-committed.
HSBC Continental Europe’s policy is it should be self-sufficient in
funding its own activities.
The Liquidity Coverage Ratio, the Internal Liquidity Metric and the Net
Stable Funding Ratio are key components of the Liquidity and Funding
Risk Framework.
Liquidity and funding risk profile
Liquidity Coverage Ratio ('LCR')
The LCR aims to ensure that a bank has sufficient unencumbered
High Quality Liquid Asset ('HQLA') to meet its liquidity needs in a 30
calendar day liquidity stress scenario. At 31 December 2025, HSBC
Continental Europe remained within the LCR risk limits established by
the Board and above the regulatory minimum.
The following table displays the average 12 month LCR levels for
HSBC Continental Europe consolidated on the European Commission
LCR Delegated Regulation basis.

Liquidity coverage ratio (non audited)
| At
| 31 Dec 2025 | 31 Dec 2024
| % | %
HSBC Continental Europe | 147 | 150

Net Stable Funding Ratio ('NSFR')
The NSFR is defined as the ratio between the amount of stable
funding available and the amount of stable funding required. HSBC
Continental Europe's calibration of the NSFR is based on the CRR2
(Regulation EU 2019/876).
At 31 December 2025, HSBC Continental Europe's NSFR was within
the risk limits established by the Board and above the regulatory
minimum.
The table below displays the NSFR levels for HSBC Continental
Europe consolidated.

Net stable funding ratio (non audited)
| At
| 31 Dec 2025 | 31 Dec 2024
| % | %
HSBC Continental Europe | 164 | 137

Liquid assets
The table below shows the weighted liquidity value of assets
categorised as liquid, which is used for the purposes of calculating the
LCR. This reflects the stock of unencumbered liquid assets at the
reporting date, using the regulatory definition of liquid assets.

Liquid assets (non audited)
| Estimated liquidity value at
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Level 1 | 97,202 | 77,234
Level 2a | 1,660 | 2,366
Level 2b | 2,708 | 2,519

Level 1 liquid assets include HSBC Continental Europe balances with its central
banks (excluding non-withdrawable reserves) and notes and coins.
Sources of funding
Our primary sources of funding are customer accounts, repo and
wholesale issuances and capital instruments.
The following table analyses HSBC Continental Europe’s
consolidated balance sheet according to the assets that primarily
arise from operating activities and the sources of funding primarily
supporting these activities. Assets and liabilities that do not arise
from operating activities are presented as a net balancing source or
deployment of funds.
Wholesale funding markets are accessed by issuing senior debt
securities (publicly and privately) and borrowing from secured repo
markets against high-quality collateral, to align asset and liability
maturities, currency mismatches and to maintain a presence in local
wholesale markets.
The main financing transactions in 2025 are presented in the
Significant events during the year section on page 210.

Funding sources and uses
| 2025 | 2024 |  |  | 2025 | 2024
| €m | €m |  |  | €m | €m
Sources |  |  |  | Uses |  |
Customer accounts | 97,107 | 97,065 |  | Loans and advances to customers | 42,835 | 51,288
Deposits by banks | 14,514 | 11,820 |  | Loans and advances to banks | 5,715 | 5,703
Repurchase agreements – non-trading | 14,486 | 12,344 |  | Reverse repurchase agreements – non-trading | 29,308 | 25,764
Debt securities in issue | 14,129 | 15,257 |  | Assets held for sale | 377 | 25,477
Cash collateral, margin, settlement accounts and Items in the course of transmission to other banks | 18,437 | 14,775 |  | Cash collateral, margin, settlement accounts and Items in the course of collection from other banks | 10,260 | 15,321
Liabilities of disposal groups held for sale | 10,648 | 24,718 |  | Trading assets | 30,801 | 22,853
Subordinated liabilities | 1,894 | 1,941 |  | – reverse repos | 113 | 39
Financial liabilities designated at fair value | 11,086 | 9,906 |  | – stock borrowing | 186 | 186
Liabilities under insurance contracts | 531 | 518 |  | – other trading assets | 30,502 | 22,628
Trading liabilities | 18,376 | 16,480 |  | Financial investments | 28,003 | 20,740
– repos | — | — |  | Cash and balances with central banks | 58,092 | 48,907
– stock lending | 1 | 1 |  | Other balance sheet assets | 46,000 | 48,955
– other trading liabilities | 18,375 | 16,479 |  | At 31 Dec | 251,391 | 265,008
Total equity | 13,566 | 14,831 |  |  |  |
Other balance sheet liabilities | 36,617 | 45,353 |  |  |  |
At 31 Dec | 251,391 | 265,008 |  |  |  |

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Interest-rate risk of the banking book
Banking Net Interest Income sensitivity
Banking NII Sensitivity is the sensitivity of our banking net interest
income to interest rate shocks. This metric includes the sensitivity
arising from the use of banking book liabilities to fund trading assets,
as well as the impacts of vanilla foreign exchange swaps to optimise
cash management.
The banking NII sensitivities represent a hypothetical simulation of the
base case banking NII, assuming a static balance sheet (specifically
no assumed migration from current account to term deposits), and no
management actions from Treasury. This also incorporates the effect
of interest rate behaviouralisation, prepayment of loans and
commercial margins. The sensitivity calculations exclude pensions,
insurance exposures, and our interests in associates.
All forecasted market rates are based on implied forward rates from
the reporting date. Customer pricing includes flooring where there are
contractual obligations.
As the market and policy rates move, the degree to which these
changes are passed on to customers may vary based on several
factors, including the absolute level of market rates, regulatory and
contractual frameworks, and competitive dynamics. To aid
comparability between markets, we have simplified the basis of
preparation for our disclosure and have used a 50 per cent pass-on
assumption on certain interest-bearing deposits. Our asset pass-on
assumptions are largely in line with our contractual agreements or
established market practice, which typically results in a significant
portion of interest rate changes being passed on.
The banking NII sensitivity reflects the assessed impact to a
hypothetical base case projection of our banking NII under an
immediate shock of 100bps to the current market-implied path of
interest rates across all currencies on 31 December 2025. An
immediate interest rate rise of 100bps would increase projected
banking NII by EUR59m. An immediate interest rate fall of 100bps
would decrease projected banking NII by EUR57m.
The sensitivity of banking NII for 12 months as at 31 December 2025
decreased by EUR103m in the plus 100bps parallel shock and by
EUR106m in the minus 100bps parallel shock, when compared with
31 December 2024. The decline in sensitivities is primarily due to an
increase in stabilisation activities executed during the year.
Structural foreign exchange risk
Structural foreign exchange ('SFX') risk arises from the capital
invested or net assets in a foreign operation (SFX exposure) together
with any associated hedging. A foreign operation is defined as a
subsidiary, associate, joint arrangement or branch of a reporting
entity, the activities of which are conducted in a currency other than
that of the reporting entity.
Unrealised gains or losses due to revaluations of structural foreign
exchange exposures are recognised in other comprehensive income,
whereas other unrealised gains or losses arising from revaluations of
foreign exchange positions are reflected in the income statement.
HSBC Continental Europe's structural foreign exchange exposures are
managed with the primary objective of ensuring, where practical, its
consolidated capital ratios and the capital ratios of individual banking
subsidiaries are largely protected from the effect of changes in
exchange rates.
Pension risk
Overview
HSBC provides future pension benefits on both defined contribution
basis and defined benefit basis in its European operations. Pension
risk refers to the financial and non-financial risk from the pension
plans offered to employees.
Most of the plans in HSBC Continental Europe are defined
contribution pension plans. In these plans the contributions that HSBC
is required to make are known, while the ultimate pension benefit will
vary, typically with investment returns achieved by investment
choices made by the employee. While the market risk to HSBC of
defined contribution plans is low, it is still exposed to operational and
reputational risk.
In defined benefit pension plans, the level of pension benefit is
known. Therefore, the level of contributions required by HSBC will
vary due to a number of parameters, including:
– Investments delivering a return below that required to provide the
projected plan benefits;
– Prevailing economic environment leading to corporate failures, thus
triggering write-downs in asset values (both equity and debt);
– Change in interest rates, credit spreads or inflation, causing an
increase in the value of the plan liabilities; and
– Plan members living longer than expected (known as longevity risk).
The most material pension plan in terms of risk exposure is the
defined benefit pension scheme run for the operations in Germany.
The scheme is separated via a Contractual Trust Arrangement. The
liabilities of the plan are covered by assets held in a pension fund.
Key Developments in 2025
There were no major changes regarding the pension risk
management processes in 2025.
Governance and Structure
Pension plans are run by local fiduciaries in line with local legislative
requirements and HSBC policies. As this is the case for the other
types of risk, pension risk follows the HSBC risk management
framework, based on a three lines of defence model.
Funded defined benefit plans invest contributions in a range of
investments designed to limit the risk of assets failing to meet a
plan’s liabilities. Any changes in expected returns from the
investments may also change future contribution requirements. In
pursuit of these long-term objectives, an overall target allocation of
the defined benefit plan assets between asset classes is established.
In addition, each permitted asset class has its own benchmarks, such
as stock market or property valuation indices or liability
characteristics. The asset allocation and benchmarks are reviewed at
least once every three to five years and more frequently if required by
local legislation or circumstances. The process generally involves an
extensive asset and liability review.
Key Risk management processes
The financial risk from material defined benefit plans is subject to risk
indicators regarding the actual surplus or shortfall of assets versus
liabilities and the potential shortfall from future market movements.
The latter risk is assessed using an economic capital model that takes
into account potential variations on both pension assets and pension
liabilities in a one-in-2000-year stress test. Scenario analysis and other
stress tests are also used to support pension risk management.

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Non financial risk
Operational risk
Overview
In accordance with the French Order of 3 November 2014 modified
the 25 February 2021, operational risk is defined within the HSBC
Group as a risk event which materialises within HSBC due to:
– inadequate or failed internal processes, people, data and systems;
and
– external events, including Legal risk.
This risk includes notably external or internal fraud risk (article 324 of
EU regulation No. 575/2013), non-authorised activities, errors and
omissions (including events characterised by a low probability but
with a high operational loss in case of occurrence), and risks related to
models.
The risk of loss could be materialised under the seven non-financial
risk categories as defined in the HSBC Group taxonomy: Financial
Reporting and Tax Risk, Financial Crime Risk, Regulatory Compliance
Risk, Legal Risk, Resilience Risk, Model Risk and People Risk.
Regulatory framework
Basel III regulatory dispositions require that banking institutions take
into account the operational risk management on three levels in terms
of:
– Capital requirements to take into account all banking risks and their
economic reality (Pillar I);
– Operational risk framework, meaning an implementation of an
internal framework to manage risks which should enhance the
prudential supervision by the national supervisors (Pillar II); and
– Information and financial communication on the matter, intended to
administrators, supervisory authorities and shareholders (Pillar III).
Beyond regulatory requirements, managing operational risks and the
permanent evolution of the control framework depending on changing
activities and regulations to reduce losses is a priority for HSBC
Continental Europe and also improves customer experience in its daily
activities.
Operational Risk Management – Methodology
defined by the regulator
Like HSBC Group, HSBC Continental Europe currently uses the
standardised approach for the calculation of operational risks.
It implies that a method has to be determined to allocate the global
gross income to Basel business lines defined by the regulator. Among
qualitative criteria used for this method, the implementation of an
internal operational risk framework is required and needs to include
the following aspects:
– Regular inventory of operational losses;
– Potential operational risks identification for all entities;
– Implementation of risk management processes, by defining and
implementing action plans to mitigate the risks and by monitoring
risk indicators;
– Implementation of an independent structure to manage those risks;
and
– Regular communication of information about the evolution of these
risks to the executive management.
Quantitative aspects (non audited)
The calculation of the regulatory capital relating to operational risk and
its communication to the Prudential and Resolution Control Authority
and the European Central Bank ('ECB') is carried out by the Finance
Department.
French banks, like all banks within the European Union, are required
to adopt the single, non-model-based Standardised Approach ('SA')
for operational risk calculation under the finalised Basel III reforms
(often referred to as "Basel 3.1" or "Basel III Endgame"). This new
approach replaces all previous methods (Basic Indicator Approach,
Standardized Approach, and Advanced Measurement Approach) for
calculating Pillar 1 operational risk capital.
Its key objective is to calculate capital charge for operational risk
using:
– A simple, comparable, and risk-sensitive method.
– Based on bank size (income) and internal loss experience.
The new Standardised Measurement Approach ('SMA') a risk
sensitive standardised approach based on a bank’s income and
historical losses, replaces the Advanced Measurement Approach
('AMA'), Basic Indicator Approach ('BIA'), The Standardised Approach
('TSA') and Alternative Standardised Approach ('ASA'). Regulators
retain the discretion to apply SMA to non-internationally active banks.
Qualitative aspects
Enterprise Risk management tasks include the following activities:
– Definition and maintenance of risk appetite, policies and
frameworks;
– Day-to-day advice, guidance and review and challenge;
– Ongoing assurance activities, analysis and aggregation;
– Periodic assurance activities – targeted and specific reviews, and
deep-dives; and
– Operating Non-Financial Risk processes and controls.
Key developments in 2025
In 2025, Enterprise Risk Management continues to support the
transformation of HSBC Continental Europe. This was achieved by
closely overseeing the execution of strategic initiatives and by
ensuring that the risk profile remained aligned with the approved risk
appetite in close coordination with business and functions.
Over the year, the Enterprise Risk Management function further
strengthened the risk culture framework through the implementation
of a dedicated Risk Culture dashboard. This dashboard is embedded
into governance as a standing agenda item, presented to the HSBC
Continental Europe Risk Management Meeting.
In addition, the Enterprise Risk Management team contributed
amongst other topics to the successful implementation of Digital
Operational Resilience Act ('DORA'), including HSBC Continental
Europe local Third Party Risk policy uplift, and the formalisation of a
new local HSBC Continental Europe Technology and Cyber Security
Risk Policy in line with DORA requirements, the strengthening of the
Risk Data Aggregation and Risk Reporting framework, the support of
the safe implementation of the European Artificial Intelligence Act.

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Governance and structure
The ERM function within Global Risk and Compliance acts as the
manager and guardian of the risk management framework and
provides a range of products and capabilities to all parts of HSBC to
enable its implementation. The ERM functions acts also as Risk
stewards for Resilience risks, ESG and reputational risks.
The function is directly supervised; by the Chief Risk Officer, brings a
holistic vision of risks and provides an overview of the main risks to
the executive management, the Risk Committee and the HSBC
Group. The ERM team collaborates with the other Risk Stewards in
the Second Line of Defence on critical subjects, such as risk maps
reviews, design and monitoring of action plans, incident reporting, risk
indicators and control plans.
To ensure consistent monitoring of operational risks across the bank,
the Enterprise Risk Management function hosts at least 3 times a
year the HSBC Continental Europe Enterprise Risk Forum, The
purpose of this forum is to provide guidance and supervision of risk
management and permanent control across the entity. The objective
of the Forum is to:
– Inform the main developments in the risk management system,
– Examine cross-cutting issues related to risk management or
methodological issues (such as risk assessment, piloting tool),
– Promote Risk Culture by facilitating exchanges between the
stakeholders in the First Line of Defence ('1 LoD'), Second Line of
Defence ('2 LoD') and Third Line of Defence ('3LoD'),
– Review the results of the analytical work carried out by the SLoD
and Assurance teams, such as transversal risk tracking, or incidents
root cause analysis, and
– Challenge significant FLoD incidents and issues.
The main deficiencies identified in those forums are escalated to the
HSBC Continental Europe Risk Management Meeting, which provides
a transverse vision of risks to the Chief Risk Officer (Chair of the
RMM), and to the other members of the HSBC Continental Europe
senior management.
Key risk management processes
Risk and Control Assessment
The implementation of Risk and Control Assessment is under the
responsibility of risk and control owners in the First Line of defense .
The Chief Control Officer teams coordinate the implementation and
regular update of Risk and Control Assessment.
The Risk Prioritisation Matrix (‘RPM’) tool is used to assess inherent
and residual risks considering likelihood and impacts (financial,
reputational, financial and customer).
The Risk and Control Assessment is based on an inherent risk
assessment, which relates to the most significant risk scenario that
can occur in the next 12 months, assuming no control in place.
Residual risk is then determined by considering the effectiveness of
the control environment, representing the level of risk remaining after
controls have been applied.
Mapped risks are assessed on a scale of four levels: Very High, High,
Medium, and Low. This hierarchy of risks is a steering and decision-
making tool for senior management, as it supports the prioritisation of
plans for strengthening or modifying the framework. It is also used by
assurance teams to develop second-level permanent control plans as
part of a risk-based approach.
The Risk and Control Assessment covers risks to which entities are
exposed and reflects key controls from the first level along with the
second level control framework that enable the bank to mitigate the
most significant risks. Updates are performed on a continuous basis
and based on triggers such as:
– Results of controls performed by operational teams;
– Results of independent controls done by assurance teams from the
Second Line of defence;
– Recommendations and review and challenges from Risk Stewards;
– Recommendations from periodic control reports, or third parties’
reports (including regulators); and
– Internal or external events.
The Enterprise Risk Management function conducts regular quality
reviews of material risks identified in RCAs.
These reviews include in particular the challenge of risk ratings, the
assessment of controls and the monitoring of associated remediation
actions.
In addition, Risk and Control Assessments are formally presented
annually for each business line and function by the relevant Risk
Owner with the involvement of risk stewards and audit.
Incidents management and escalation
Major operational incidents linked to HSBC activities are reported to
the HSBC Continental Europe Risk Management Meeting ('RMM').on
the basis of information stored in the operational risk management
system, Helios. Helios manages in a centralised manner identification
and updating processes, operational losses reports and the follow-up
of action plans that aim to mitigate the main risks.
The Functional Instruction Manual categorises operational incidents
with respect to different natures and distinguishes the various impact
types associated with them. Following a significant incident, the root
cause is investigated through detailed analysis. This is to establish if
there are links between similar processes or controls and the cause,
or causes, of the original incident.

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Operational risk losses: quantitative data starting from 2016

Operational losses from 2016 to end of 2025 per risk category 1 (in EUR million) (non audited)
| Ac- count- ing risk | Building Unavail- ability and work- place safety event 3 | People Risk | Fraud (Ex- ternal + In- ternal)2 | Failure in other prin- cipal risk pro- cessing | Infor- mation, tech- nology, and cyber security risk | Legal risk | Trans- action proc- essing 3 | Regu- latory com- pliance risk | Secu- rity of people and physical assets event | Data risk 4 | Finan- cial report- ing and tax risk | Breach of fidu- ciary obliga- tions | Finan- cial Crime event | Model risk | Re- silience risk 3 | Total
2016 | — | — | 0.60 | 11.10 | (0.20) | — | 0.10 | (15.70) | 36.20 | — | 0.30 | — | — | — | — | — | 32.40
2017 | — | 0.10 | 0.90 | 3.10 | 1.40 | — | — | 3.40 | 0.70 | — | 0.10 | 1.00 | — | — | — | — | 10.70
2018 | 7.83 | — | (0.07) | 2.40 | 0.68 | — | 0.70 | 3.36 | 2.00 | — | 0.10 | 0.40 | — | — | — | — | 17.40
2019 | — | 0.02 | 0.99 | 2.50 | 1.68 | 1.22 | (0.04) | 8.09 | (1.19) | — | — | 1.80 | 0.02 | — | — | — | 15.08
2020 | — | 0.04 | 0.27 | 2.32 | 1.35 | 0.22 | — | 54.32 | 2.70 | — | — | 0.09 | 0.01 | — | 17.11 | 3.28 | 81.70
2021 | — | — | 0.62 | 2.00 | 1.73 | — | (0.02) | 2.96 | 1.05 | — | — | 11.08 | — | 2.07 | — | 2.97 | 19.49
2022 | — | — | (0.02) | 0.51 | 5.85 | 0.07 | — | 4.09 | 4.04 | — | — | (10.77) | — | 0.60 | 0.05 | 3.95 | 3.70
2023 | — | 0.16 | 0.50 | 31.15 | 1.24 | 0.14 | (8.90) | 3.96 | (0.48) | — | — | 2.70 | — | 31.15 | — | 4.18 | 30.40
2024 | — | — | (0.94) | (0.50) | 1.33 | (0.89) | (4.16) | 8.83 | 2.62 | — | 0.46 | 2.06 | — | (0.46) | — | 8.59 | 9.04
2025 | — | — | 0.75 | (2.22) | 0.37 | 0.14 | 0.34 | 9.20 | 0.15 | — | 0.01 | 0.60 | — | (2.22) | — | 9.35 | 9.34

1 Figures Source: Operational risk system Helios.
2 Fraud (External and Internal) External and Internal Fraud included in financial crime since 2021.
3 Resilience risk include Technology and Cyber Security Risk, Data Risk, Data Privacy Law, Building Unavailability, Workplace Safety, Protect People and Places
against malevolent act (Protective Security), Business Interruption and Incident Risk, Third Party Risk, Transaction and Payment Processing Risk and Change
Execution Risk from 2025.
4 Data risk (previously: Systems and data integrity event).

Number of financial impacts linked to internal events, per risk category 1 (non audited)
| Ac- cou- nting risk | Building Unavail- ability and work- place safety event 3 | People Risk | Fraud (Ex- ternal + In- ternal)2 | Failure in other prin- cipal risk pro- cessing | Informa- tion, tech- nology, and cyber security risk | Legal risk | Trans- action proc- essing 3 | Regu- latory com- pliance risk | Secu- rity of people and physical assets event | Data risk 4 | Finan- cial report- ing and tax risk | Breach of fidu- ciary obliga- tions | Finan- cial Crime event | Model risk | Re- silience risk 3 | Total
2016 | — | — | 26 | 136 | 41 | — | 19 | 140 | 51 | — | 10 | — | — | — | — | — | 423
2017 | 1 | 1 | 33 | 117 | 32 | 1 | 5 | 248 | 41 | — | 7 | 3 | — | — | — | — | 489
2018 | 4 | — | 34 | 112 | 35 | — | 8 | 276 | 26 | — | 17 | 6 | — | — | — | — | 518
2019 | — | 1 | 38 | 103 | 63 | 8 | 2 | 194 | 27 | — | — | 9 | 10 | — | — | — | 455
2020 | — | 1 | 35 | 73 | 42 | 8 | — | 183 | 38 | — | — | 2 | 6 | — | 2 | 27 | 417
2021 | — | — | 34 | 66 | 52 | — | 8 | 170 | 68 | — | — | 6 | — | 68 | — | 171 | 407
2022 | — | — | 29 | 103 | 57 | 3 | — | 241 | 56 | — | — | 17 | — | 104 | 7 | 251 | 521
2023 | — | 5 | 33 | 240 | 37 | 10 | 9 | 352 | 70 | — | — | 13 | — | 240 | — | 380 | 782
2024 | — | 1 | 88 | 84 | 3 | 15 | 10 | 359 | 83 | — | 10 | 24 | — | 85 | — | 388 | 681
2025 | — | — | 76 | 94 | 7 | 6 | 13 | 442 | 26 | — | 4 | 8 | — | 98 | — | 452 | 680

1 Figures Source: Operational risk system Helios.
2 Fraud (External and Internal) External and Internal Fraud included in financial crime since 2021.
3 Resilience risk include Technology and Cyber Security Risk, Data Risk, Data Privacy Law, Building Unavailability, Workplace Safety, Protect People and Places
against malevolent act (Protective Security), Business Interruption and Incident Risk, Third Party Risk, Transaction and Payment Processing Risk and Change
Execution Risk from 2025.
4 Data risk (previously: Systems and data integrity event).

RWA and capital requirements related to operational risk to the end of 2025 (non audited)
€m | RWAs | Capital requirements
HSBC Continental Europe | 7,624 | 610

Resilience risk
Overview
Resilience risk is the risk that the bank is unable to provide critical
services to its customers, affiliates and counterparties, as a result of
sustained and significant operational disruption. Resilience risk arises
from failures or inadequacies in processes, people, systems or
external events.
The main resilience risks for HSBC Continental Europe in 2025 are,
technology and cyber security, third party and data risks.
Technology and cyber security risk is the risk associated with
disruption to a business service as a result of error or failure of an IT

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asset/IT service, or as a result of malicious activity impacting an IT
asset, IT service, or data (including cyber-attack).
Cyber threats and dependence on common third-party service
providers continue to present major challenges. The ongoing
digitalisation of banks’ services and operations and the escalation of
geopolitical tensions have both been key factors in the sharp rise in
cyber incidents over the past two decades. Any deficiency in the
management of risks (e.g. cyber risk and data risks) associated with
our third parties could affect our ability to support our customers and
meet regulatory expectations.
Third party risk is the risk of failure to manage Internal and External
Third Parties through the engagement lifecycle leading to a failure to
meet our operational business requirements, impacting HSBC
customers and/or HSBC employees or causing regulatory breaches,
civil or monetary penalties or damage to shareholder value and
reputation.
Data risks include risk of failure in the processing of data by the bank
and its third parties (either on behalf of the bank or to deliver services
to the bank), that could lead to breach of applicable laws and
regulations, including Data Privacy Laws, and/or affect our ability to
provide services to our customers or protect their rights.
Key Developments in 2025
During 2025, the Enterprise Risk Management function, in the
Second Line of Defense, provided enhanced non-financial risk
steward oversight and independent challenges across the legal entity.
HSBC Group and HSBC Continental Europe carried out initiatives to
strengthen the management of resilience risks, notably via:
– Updated material risk taxonomy and control libraries and
assessments;
– Further embedded its governance and oversight of third party,
technology and cyber security as well as data risk management
including remediation programs in these areas; and
– Enhanced focus on data risk to mature the control environment in
managing personal data and business data, as part of a multi-year
data strategy program.
With respect to Data Privacy:
– HSBC Continental Europe, in line with HSBC Group, continues to
enhance Data Privacy governance aiming to maintain controls
aligned with evolving regulatory requirements
Specifically for third party risk and technology and cyber security risk:
– Enhancing HSBC Continental Europe's processes, framework and
controls to improve the oversight of its third parties (including
material). HSBC Continental Europe has strengthened its due
diligence and monitoring capabilities, with respect to the financial
stability of its third parties to better manage its supply chain and
continues to assess and seek to manage its operational resilience.
– Implemented successfully the Digital Operational Resilience Act
('DORA') in Europe covered under the broader Operational
Resilience framework.
– Revised the incident reporting process, DORA testing framework
and risk management requirements for information and
communication technology.
– Continued work with HSBC Continental Europe's suppliers, financial
infrastructure bodies and other non-traditional third parties, in an
effort to help reduce the threat of cyber-attacks impacting its
business services.
– Strengthened the way third-party risk is overseen and managed
across all non-financial risks and enhanced processes, framework
and reporting capabilities to improve the control and oversight of
material third parties by global businesses and functions.
Specifically for data risk:
– Enhanced the control environment for risk data aggregation and
risk reporting and for Artificial Intelligence services to meet
European Artificial Intelligence Act requirements.
Governance and structure
The Enterprise Risk Management function provides a Second Line of
Defense view across resilience risks: data, change execution, third
parties and supply chains; information, technology and cybersecurity;
payments and manual processing; physical security; business
interruption and incident response; facility availability, security and
safety.
All these risks are monitored through dedicated First Line of Defense
committees with an escalation path to the HSBC Continental Europe
RMM.
The RMM chaired by the HSBC Continental Europe Chief Risk Officer
is the overarching committee to govern all risks in HSBC Continental
Europe with an escalation path to its counterpart at Regional level,
and to the Operating Committee and the Risk Committee of HSBC
Continental Europe.
Key risk management process
Operational resilience is our ability to anticipate, prevent, adapt,
respond to, recover and learn from operational disruption while
minimising customer and market impact. Resilience is determined by
assessing whether we are able to continue to provide our important
business services, within an agreed level.
HSBC Continental Europe achieves this by adopting and
implementing the HSBC risk management framework. This includes
policies and procedures that define the control environment
implemented across the three lines of defense to manage resilience
risks ensuring the right balance of risk and return, through informed
decision-making and controlled risk-taking.
The bank manages Resilience risks, through amongst other, the Risk
Appetite Statement and Risk Map. The Risk Appetite Statement
defines the level of risk, the bank would accept to take. It is defined
via qualitative and quantitative indicators with appetite and tolerance
thresholds.
The Risk map gives the aggregated Second Line of Defence opinion
at the entity level of the most material risks and how they are being
managed.
Training and awareness
HSBC Continental Europe understands the important role its people
play in protecting against cybersecurity, data management and third
party risks.
HSBC Continental Europe's mission is to equip every colleague with
the appropriate tools and behaviours they need to keep the
organisation and customers’ data safe. HSBC Continental Europe
provides cybersecurity training and awareness to its people, ranging
from its top executives to IT developers to front-line relationship
managers, and understands the important role of data management,
quality and protection, in order to meet regulatory expectations,
prevent harm to customers and unlock business opportunities via
digital initiatives.
HSBC Continental Europe has provided training regarding the new
regulatory requirements concerning DORA.

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Model risk
Overview
Model risk is the potential for adverse consequences from business
decisions informed by models, which can be exacerbated by errors in
methodology, design or the way they are used. Model risk arises in
both financial and non-financial contexts whenever business decision
making includes reliance on models.
Key developments in 2025
In 2025, HSBC Continental Europe continued to make improvements
in model risk management processes, amid regulatory changes in
model requirements. Key initiatives during the year included:
– New internal ratings-based (‘IRB’) models used for credit risk have
been successfully implemented into production after having secured
regulatory approvals;
– The redevelopment, validation and regulatory submission of internal
model method ('IMM') models for counterparty credit risk. These
new models have been built to enhanced standards using improved
data as a result of investment in processes and systems;
– HSBC Continental Europe continued the remediation of regulatory
measures on models used for Pillar 1 purposes, including internal
rating-based models, internal model approach (‘IMA’) and internal
model method (‘IMM’);
– HSBC Continental Europe continued embedding, the governance
and oversight around model adjustments and related processes for
IFRS Accounting Standards models and Sarbanes-Oxley controls;
and
– HSBC Continental Europe continued enhancing its model risk
management framework, including by strengthening staffing in the
areas of model development and model validation.
Governance and structure
The Model Risk Management function provides oversight to model
risk in HSBC Continental Europe by performing the following key
activities:
– Ensuring that model risk is managed within the approved appetite
levels;
– Providing assurance on the implementation of the model risk policy;
– Monitoring regulatory developments impacting model risk; and
– Independently validating models, providing an objective, unbiased
and critical opinion on the suitability and soundness of models for
their intended use and the accuracy, relevance and completeness of
outputs used to inform business decisions.
Key risk management processes
Through its model risk management framework HSBC Continental
Europe aims to ensure that:
– All models used are identified and recorded in the central model
inventory.
– Models are designed to be fit-for-purpose by understanding the
business requirements, applying appropriate modelling and
documentation standards, and through effective review and
challenge.
– Models are implemented accurately into the systems and properly
deployed to model users, enabling the identification and
management of risks from model usage.
– Models remain fit-for-purpose through ongoing monitoring,
assessments and independent validations. Change management
and model overlays are carried out in a controlled manner.
– Models that have reached the end of their useful life are properly
decommissioned.
Model Risk Management regularly reports on model risk matters to
the HSBC Continental Europe Risk Management Meeting and the
Risk Committee via the risk map, risk appetite metrics and dedicated
papers. Model Risk Management regularly reviews the effectiveness
of these processes to help ensure appropriate understanding and
ownership of model risk is embedded in the businesses and
functions.

Legal risks and litigation management
Overview
The HSBC Continental Europe Legal Department is responsible for
HSBC Continental Europe’s legal risk oversight as a Second Line of
Defence in helping HSBC Continental Europe businesses and
functions to prevent and control legal risk. As a First Line of Defence,
the Legal Department manages and controls its operational risks.
The Legal Department is in charge of litigation follow-up. The HSBC
Continental Europe Legal Department also supervises legal teams in
the HSBC Continental Europe subsidiaries and branches.
Key developments: Litigation
monitoring with regard to HSBC
Continental Europe entities
The status of the risks arising from significant litigation in progress
against HSBC Continental Europe is examined monthly by a
committee run by the Financial Controller, chaired by the Chief
Financial Officer and the Chief Risk Officer and is made up notably of
representatives of the Finance Department, the Credit Department
and the Legal Department. This committee decides the amount of
any litigation risk provision to be charged or written back.
Cases in progress as at 31 December 2025 involving legal risks likely
to have a significant effect on the financial situation of HSBC
Continental Europe are set out below.
The Apollonia case
As was the case for around 20 other banks, HSBC worked during a
limited period of time (from early 2006 to April 2007), and mainly in
one branch, with a financial adviser and estate agent, known as
Apollonia. The latter offered its clients (mainly independent
professionals) ‘turnkey’ tax efficient products of the Loueur Meublé
Professionnel (‘LMP’) (professional lessor of furnished
accommodations) type and for a small number of investors ‘Loi
Robien’ type tax efficient products.
Between April 2006 and April 2007, 184 property loan applications
were approved, for a total of EUR 29 million, bearing in mind that
different media have said the total amount of operations by Apollonia
with all banks purportedly reached around EUR 2 billion.
At the end of September 2008, HSBC Continental Europe became
aware of the use of inappropriate marketing methods by Apollonia.
Moreover, it appeared that most of the borrowers took out several
loans through Apollonia from various banks without notifying HSBC
Continental Europe.
HSBC Continental Europe is involved in the criminal proceeding as a
civil law party, giving it access to the criminal file. From this, it has
become apparent that a very large proportion of the authorisations
signed by the various buyers giving authority to sign purchase and

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sales deeds, were not properly prepared by notaries, thereby giving
rise to counterclaims against loan reimbursement.
HSBC Continental Europe has also systematically filed civil
proceedings against investors with loan repayments due but the
hearings are often held in abeyance because of the criminal
proceedings underway, against third parties (and not including HSBC
Continental Europe). However, in order to settle the financial aspects
of the matter, without waiting for the outcome of criminal
proceedings, out-of-court settlements have already been reached with
some borrowers and talks are continuing with other borrowers.
Proceedings have also been commenced against the notaries
involved and their insurer MMA. These proceedings have also been
adjourned for the time being.
HSBC Bank Polska S.A.: ACTION Case
On 29 June 2018, HSBC Continental Europe acquired from HSBC
Bank plc 100 per cent of the shares of HSBC Bank Polska S.A.
Pursuant to the terms of the Sale and Purchase Agreement, HSBC
Continental Europe and/or its subsidiaries will be indemnified by
HSBC Bank plc in respect of certain liabilities relating to the activities
of HSBC Bank Polska S.A. prior to the acquisition of HSBC Bank
Polska S.A. including the following legal proceeding. In April 2017,
ACTION brought an action against HSBC Bank Polska S.A. alleging,
among other things, breach of a facility agreement and claiming
damages and indemnification for lost profits. The proceeding is
ongoing.
Tax-related investigations
See Note 33 of the consolidated financial statements with regard to
other significant legal proceedings and regulatory matters relating to
HSBC Group entities generally, including HSBC Continental Europe.
Other regulatory, civil law or arbitration
proceedings
To date, as far as HSBC Continental Europe is aware, it is not
threatened by any other regulatory, civil law or arbitration proceedings
that are in progress or threatened against it that might have, or over
the last 12 months have had, any significant effect on the financial
situation or the profitability of the company and/or of the HSBC
Group.
Governance
The Legal Department is responsible for running the Legal Risks
Forum which meets quarterly with representatives of all business
lines and functions to examine situations likely to give rise to specific
and significant legal risks. The Legal Department participates in the
Product Approval Committee, in the Enterprise Risk Management
Forum, the Regulatory Change Forum and in the Risk Management
Meeting of HSBC Continental Europe, and is involved in due diligence
procedures for market operations, structured transactions and any
new acquisition (or disposal) of an entity or business by HSBC
Continental Europe.
The Legal Department is also responsible for managing risks, directly
or indirectly, connected with defence litigation matters. It is involved
in dealing with credit files requiring special management or in default.
The Legal Department monitors other risks that might have a legal
impact.
Key risk management processes
The Legal Risks Forum is chaired by the HSBC Continental Europe
General Counsel and ensures that the risk framework for legal risks
remains adequate in the face of changes in laws, regulations and
group organisation.
The Forum also examines the monitoring of incidents raised
previously, the results of implemented legal risk controls, along with
any new incidents and measures and actions taken.
This framework is effective and a detailed description of it is given in
an internal procedure.
A legal risk taxonomy has been defined to harmonise the
identification and control of legal risks within the HSBC Group. The
Legal Department is involved in the review and control of the legal
risks and controls assessed by the businesses and functions in their
various Risk and Control Assessments.

Compliance
Regulatory Compliance
Overview
Regulatory compliance risk is the risk associated with breaching our
duty to clients and other counterparties, inappropriate market conduct
and breaching related financial services and data protection regulatory
standards. Regulatory compliance risk arises from the failure to
observe relevant laws, codes, rules and regulations and can manifest
itself in poor market or customer outcomes and lead to fines,
penalties and reputational damage to our business.
Key developments in 2025
Regulatory horizon scanning and mapping capabilities continue to
evolve with the focus on enhanced connectivity to risk management
systems to support better traceability of regulatory obligations.
Governance and structure
The Chief Compliance Officer of HSBC Continental Europe reports
directly to the HSBC Continental Europe Chief Executive Officer and
Operating Committee as well as the supervisory body through the
Risk Committee and the Board of Directors in accordance with
Articles 30 and 31 of the French Order of 3 November 2014 modified
on 25 February 2021.
The Chief Compliance Officer carries out the roles of Head of
Compliance for Investment Services (‘RCSI’) for HSBC Continental
Europe in respect of Articles 312-1 and 312-2 of the General
Regulation of the AMF. The Heads of Compliance for Investment
Services (RCSI) for HSBC Continental Europe’s two Lines of Business
(Corporate and Institutional Banking and Wealth and Personal
Banking) in respect of Articles 312-1 and 312-2 of the General
Regulation of the AMF, as well as the different ‘RCSI’ or Heads of
Compliance and Internal Control (‘RCCI’) for the legal entities of HSBC
Continental Europe, fall under the HSBC Continental Europe Chief
Compliance Officer’s responsibility. For the EU branches of HSBC
Continental Europe, the organisation principles described above apply
in a similar way.
The main formal risk governance body is the HSBC Continental
Europe Risk Management Meeting ('RMM'). The Continental Europe
Chief Compliance Officer is a member, and provides updates for
noting, discussion and approval. Conduct continues to be a key area
of focus for ensuring behavioural expectations and good conduct
outcomes are being achieved with multiple initiatives. Conduct-related
performance is covered by the quarterly Conduct and Values
Committee ('CVC') chaired by the Chief Executive Officer and
attended by Operating Committee members. It is responsible for
carrying out decisions and for ensuring that the issues are
appropriately tracked within the Quarterly Conduct and Values
Committee structure. The Quarterly Conduct and Values Committee
provides decision-making and guidance in respect of conduct and
regulatory compliance risk and takes responsibility for the tracking of
escalated issues.

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Key risk management processes
HSBC Continental Europe has specific compliance examination
procedures, in accordance with the provisions of Articles 35 to 38 of
the French Order of 3 November 2014 modified on 25 February 2021
relating to the internal control systems of banks, as well as tools for
detecting and preventing non-compliance risks. These procedures and
tools are the subject of regular updates.
The Compliance function is engaged in setting policies, standards and
risk appetite to guide the management of regulatory compliance risks.
It also devises clear frameworks and support processes to mitigate
regulatory compliance risks. T he function provides oversight, review
and challenge to the country Chief Compliance Officers and their
teams to help them identify, assess and mitigate regulatory
compliance risks, where required. The regulatory compliance risk
policies are regularly reviewed. Policies and procedures require the
prompt identification and escalation of any actual or potential
regulatory breach. Relevant reportable events are escalated to the
HSBC Continental Europe RMM and Risk Committee, as appropriate.
Staff training and awareness
The Compliance function of HSBC, in conjunction with the People
department, develops an annual mandatory staff training programme
designed to address key compliance-related risks. These training
sessions, delivered both in-person and via e-learning, are
implemented through all businesses and functions. A significant
emphasis is placed on understanding regulatory and supervisory
requirements, as well as fostering effective relationships with the
relevant authorities.
In 2025 three mandatory training courses were delivered to all
employees and had to be completed within a given time frame as part
of staff performance assessment: 'Protecting ourselves, each other
and HSBC', 'Fighting Financial Crime' and 'Why good conduct
matters' as referenced in the 'Business Conduct' section.
Regulators and governments
HSBC Continental Europe proactively engages with regulators and
governments to facilitate strong relationships through virtual and in-
person meetings and by responding to consultations individually and
jointly via industry bodies. Under the consolidated approach to non-
compliance risks, the Compliance function ensures centralised
monitoring of regulatory engagements within entities of HSBC
through the Regulatory Affairs team. HSBC Continental Europe
records the material regulatory engagements between HSBC, its
regulators and supervision authorities in a tool dedicated to the
supervision.
Financial Crime
Overview
Financial crime risk is the risk of knowingly or unknowingly helping
parties to commit or to further illegal activity through HSBC, notably
Money Laundering, terrorist, and proliferation of weapons of massive
destruction financing, tax evasion, bribery and corruption, non-respect
of international sanctions, fraud, and market abuse. Financial crime
risk arises from day-to-day banking operations involving customers,
third parties and employees.
Key developments in 2025
During 2025, HSBC Continental Europe has continued its efforts to
combat financial crime and reduce the impact of such crimes on the
organisation, customers, and communities. The Bank works in
partnership with the wider industry and the public sector in managing
financial crime risk, protecting the integrity of the financial system.
There have also been several key regulatory developments. The EU
AML package proposed by the European Commission in 2021,
consisted of four material regulatory developments that have either
required process or control enhancements, as was the case for EU
regulation 2023/1113 or acute monitoring and assessment, which is
ongoing in relation to the EU AML Regulation as well as the 6 th Anti-
Money Laundering Directive.
– The creation of the new EU Anti-Money Laundering Authority
('AMLA'), which will have supervisory powers over certain obliged
entities. On 13 December 2023, the Council and Parliament reached
an agreement on the creation of this new authority;
– A regulation 2023/1113 replacing EU regulation 2015/847 regulation
on transfer of funds, includes transfers of crypto-assets. The
regulation was published in 2023 with an implementation date of
31 December 2024;
– The Anti-Money Laundering Regulation ('AMLR'), which was
published 31 May 2024 and requires implementation by July 2027;
and
– A directive on anti-money-laundering mechanisms (the “AML
Directive”).
The previous 12 months saw increased regulatory focus on sanctions,
sanctions evasion and controls employed by financial institutions (in
particular screening). The dynamic and complex external sanctions
environment has created challenges for financial institutions and their
customers to navigate; this contributes to the sanctions risk to HSBC
Continental Europe, which includes indirect risk from the activity of
customers. HSBC Continental Europe has a robust and embedded
sanctions compliance programme which is operationally effective and
has been further enhanced in 2025. The developments related to
sanctions against Russia continued to be a key area of attention
during 2025. Up to nineteen packages of sanctions (commercial and
financial restrictions) have been implemented. HSBC has enhanced its
screening and non-screening controls to aid the identification of
potential sanctions risk related to Russia, as well as risk arising from
export control restrictions. Notwithstanding the above, where
necessary, HSBC has enhanced existing sanctions policies,
procedures, and controls in order to mitigate the risk associated with
Russia-related sanctions. The external sanctions environment remains
volatile and is being closely monitored by the bank.
In terms of other key controls, HSBC Continental Europe has
completed further deployments of our intelligence-led, dynamic risk
assessment (capability for customer account monitoring replacing rule
based monitoring) as noted under section 'Risk Factors'.
Governance and structure
The HSBC Continental Europe Head of Financial Crime and Money
Laundering Reporting Officer ('MLRO') reports directly to the Chief
Compliance Officer, who reports directly to the HSBC Continental
Europe Chief Executive Officer and Operating Committee as well as
the supervisory body through the Risk Committee and the Board of
Directors. The Chief Compliance Officer is a member of the HSBC
Continental Europe Risk Management Meeting (main formal risk
governance body) and the MLRO/Head of Financial Crime provides
updates for noting, discussion and approval.
Key risk management processes
HSBC Continental Europe has specific compliance examination
procedures, in accordance with the provisions of Articles 35 to 38 of
the French Order of 3 November 2014 modified on 25 February 2021
relating to the internal control systems of banks, as well as tools for
detecting and preventing non-compliance risks. These procedures and
tools are the subject of regular updates and upgrades. HSBC
Continental Europe is acting with integrity and has built a strong

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financial crime risk management framework across all its businesses
and the EU countries in which it operates. The Bank complies with
the law and regulation of all the markets in which it operates applying
consistently high financial crime prevention rules. In cases where
material differences exist between the law and regulation, its policy
adopts the highest standard while acknowledging the primacy of local
law. The Bank continues to assess the effectiveness of its end-to-end
financial crime risk management framework and invest in enhancing
its operational control capabilities and technology solutions to deter
and detect criminal activity. Finally, the Bank also further
strengthened its financial crime risk taxonomy, control libraries,
investigative and monitoring capabilities through technology
deployments.
The HSBC Continental Europe financial crime is engaged in setting up
standards, policies, and risk appetite to guide the management of
financial crime risks and support processes to mitigate them. The
HSBC Continental Europe financial crime provides oversight, review
and challenge to the Chief Compliance Officers and their teams in the
EU locations to help them identify, assess, and mitigate complex
financial crime matters, where required. The financial crime risk
policies are periodically reviewed and updated. They require a prompt
identification and escalation of any actual or potential regulatory
breach. Relevant reportable events are escalated to the HSBC
Continental Europe RMM and Risk Committee, as appropriate.
Staff training and awareness.
In 2025, three mandatory training courses for all employees have
been delivered, as noted in the Staff training and awareness section
of 'Business Conduct' and included (among others) topics related to
financial crime risk management, money laundering, tax evasion,
sanctions, fraud, bribery and corruption, terrorist financing and
proliferation financing.

Climate and nature risks management
Overview
C limate and nature risk relates to the financial and non-financial
impacts that may arise as a result of climate change, nature
degradation and the move to a net zero economy.
Collectively, climate and nature risks are referred as “environmental
risk” and may pose different risks to the stability of the financial
system’. Two primary drivers of climate and nature risks have been
identified within their resp ective risk management approach:

| Physical risk | Transition risk
Climate | Arises from the increased frequency and severity of extreme weather events, such as hurricanes and floods, or chronic gradual shifts in weather patterns or rises in the sea level. | Arises from the process of moving to a net zero economy, including changes in government policy and legislation, technology, market demand, and reputational implications triggered by a change in stakeholder expectations, action or inaction.
Nature | Driven by dependencies on nature and arises when natural systems, and therefore their benefits to society are compromised through human activity or otherwise. | Driven by changes introduced to halt or reverse damage to nature and arises when the changes required are costly to businesses and/ or households.

The risk of greenwashing, has been identified as a ‘thematic issue’
that could manifest as reputational, regulatory compliance, and
litigation risks. This risk arises from knowingly or unknowingly making
inaccurate, unclear, misleading or unsubstantiated claims regarding
sustainability to HSBC Continental Europe’s stakeholders.
Net zero alignment risk had previously been identified as a thematic
issue and is now replaced and managed under HSBC Group's new
risk type Sustainability Execution Risk, to help identify and manage
the risks associated with the delivery and execution of HSBC Group’s
sustainability strategy.

Approach
Th e physical effects of climate change, biodiversity loss and
ecosystem services degradation in addition to the shift towards a net
zero economy pose substantial financial risks to companies, investors
and the financial system.
HSBC Continental Europe may encounter climate and nature-related
risks either directly or indirectly through its relationships with
customers, which could potentially leading to both financial and non-
financial consequences.
HSBC climate risk approach and HSBC Continental Europe's nature-
related risk approach aim to effectively manage material climate and
nature-related risks that could impact HSBC Continental Europe ‘s
operations, financial performance, stability, and reputation. It is
informed by the evolving expectations of the regulators and it is
aligned to HSBC Group-wide risk management framework, which set
out how risks are identified, assessed and managed across the three
lines of defence.
HSBC committed to enhancing its climate risk capabilities across its
businesses by prioritising sectors, portfolios and counterparties with
the highest impacts. Recognising this as a long-term, iterative
process, the bank aims to expand its coverage and integrate more
advanced data, climate analytics, frameworks and tools, while
adapting to emerging industry best practices and climate-related
regulations. These capabilities are implemented within HSBC
Continental Europe since 2020 in addition to the nature-related risk
ones in 2023.
This involves continuously reflecting on the evolving nature of
environmental risk in the real world and improving the integration of
climate and nature risks factors into strategic planning, transactions,
and decision-making across the bank’s operation s.
u For further details of the three lines of defence framework, see page 126.

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The table below provides an overview of the climate and nature risk drivers and thematic issues considered within the HSBC Group climate risk
approach and HSBC Continental Europe nature-related risk approach.

Risk drivers | Details | Potential Impacts | Time horizons
Physical | Climate – Acute | Increased frequency and severity of weather events causing disruption to business operations | – Decreased real estate values – Decreased household income and wealth – Increased costs of legal and compliance – Increased public scrutiny – Decreased profitability – Lower asset performance | Short term Medium term Long term
Climate – Chronic | Longer-term shifts in climate patterns (e.g. sustained higher temperatures, sea level rise, shifting monsoons or chronic heat waves)
Nature – Acute | Increased severity of sudden and event-driven disruptions in natural systems (e.g. leak, accidental discharges such as oil spill, pest outbreaks) affecting loss of key species and crop productivity
Nature – Chronic | Gradual and long-term degradation of ecosystems causing reduced supply of natural stocks (e.g. crop yield) and quality of ecosystem services (e.g. clean water)
Transition | Policy and legal | Mandates on, and regulation of, existing products and services and/or policy support for low-carbon alternatives. Litigation from parties who have suffered loss and damage from the e impacts of climate change and nature degradation
Technology | Replacement of existing products with lower emission options
End-demand (market) | Changing consumer demand from individuals and corporates
Reputational | Increased scrutiny following a change in stakeholder perceptions of climate and nature-related action or inaction

Thematic issue |  |
Risk of greenwashing | Firm | Making inaccurate, unclear, misleading, or unsubstantiated claims in relation to HSBC sustainability commitments and targets, as well as the reporting of its performance towards them.
Product | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to products or services offered to clients that have stated sustainability objectives, characteristics, impacts or features.
Client | Making inaccurate, unclear, misleading or unsubstantiated claims as a consequence of bank's relationships with clients or transactions HSBC undertake with them, where their sustainability commitments or related performance are misrepresented or are not aligned to HSBC own commitments.

The climate and nature related risk annual materiality assessment
helps HSBC Continental Europe to understand how environmental
risk may impact across HSBC’s risk taxonomy. It assesses the type
of impact, likelihood and severity over a 12-month period, and also
considers forward looking risk impacts.
It is used to support policy, control enhancements, and scenario
analysis.
u For further details, see ‘Environmental, Social and Governance ('ESG')’ on
page 130 and the s ection "Resilience of the strategy and business model" in
Sustainability Statement, page 53

Climate/Nature risk drivers | Credit risk | Traded risk | Reputational risk | Regulatory compliance risk | Resilience risk | Other financial and non-financial risk types
Physical risk | u | u |  |  | u | u
Transition risk | u | u | u | u | u | u

u | Relevant risk driver

Key developments in 2025
Climate and nature risk management capabilities continue to be
developed across the Bank . The following outlines key developments
in 2025:
– The approach to managing HSBC financed emission targets in the
Group wholesale portfolio have been enhanced through developing
portfolio steering capabilities and revenue at risk assessments.
– The approach to assess the impact of climate change on capital,
focusing on credit, market and operational risks has been enhanced.
– Internal climate and nature scenario analysis has been enhanced,
thanks to use of strengthened data and model. For further details
related to scenario analysis, see section 'Resilience of the strategy
and business model' on page 53 under Sustainability Statement.
– The approach to manage and mitigate the risk of greenwashing has
been enhanced.
– Enhancement of climate and nature risk guidelines for relationship
managers to further embed environmental risk considerations into
credit risk assessments.
Governance and structure
The HSBC Continental Europe Board takes overall supervisory
responsibility to ensure that ESG strategy is executed and monitored
with appropriate reporting and key indicators.
The HSBC Continental Europe Chief Risk Officer is the senior
manager responsible for the management of ESG risks.
The Reputational Risk and Client Selection Committee provides
recommendations and advice on significant reputational risk matters
with impacts across HSBC Continental Europe.
The Sustainability Execution Group ('SEG') committee provides
oversight of environmental risk, including the risk of greenwashing.
The HSBC Continental Europe Risk Management Meeting and Risk
Committee receive updates on the Bank environmental risk profile.

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Risk appetite
The HSBC Continental Europe climate risk appetite forms part of the
Bank‘s risk appetite statement and support the business in delivering
HSBC net zero ambition effectively and sustainably.
The climate risk appetite statement is approved and overseen by the
Board. Additional Key Risk Indicators (‘KRI’) and Risk Indicators (‘RI’)
covering climate, nature and social areas are defined and reported on
a quarterly basis to the HSBC Continental Europe Sustainability
Execution Group and on an annual basis to the HSBC Continental
Europe Risk Management Meeting and Risk Committee.

Policies, processes and controls
HSBC Continental Europe continues to update and integrate climate
and Nature risks into policies, processes and controls across the
organisation.
u For further details on how environmental risk is managed in HSBC
Continental Europe, see Sustainability Statement – section 'Managing
climate-related risks' page 70 and 'Managing nature-related risks' Page 77.

Embedding climate and nature-
related risk approaches
The below details how the management of climate and nature-related
risks have been embedded across key risk types.
u For further details on internal scenario analysis, see ‘Resilience of the
business model in relation to environmental risks’ in the Sustainability
statement on page 54.
Wholesale credit risk
Similar to previous years, tools and supporting information are used
for the identification and assessment of climate and nature risks
(transition and physical risks) for HSBC Continental Europe’s
wholesale corporate population at a client and portfolio level.
HSBC Continental Europe relationship managers engage with
wholesale corporate customers with the highest climate risk
characteristics through a Transition Engagement Questionnaire to
understand the client's transition plans and pathway to net zero,
alongside their exposure to transition and physical risks. The
responses in the questionnaire are used to create a climate score for
key corporate customers.
A dedicated section on nature has been added to the Transition
Engagement Questionnaire to capture information and data related to
nature risks. This allows for the calculation of a nature score in
addition to the climate score for HSBC Continental Europe key
corporate customers. Information and data on nature is nascent and
this initial approach is being continually refined over time as data on
nature becomes more granular.
HSBC Continental Europe credit policies require relationship
managers to assess climate and nature risk factors in credit
applications at every annual review and new money request for
clients in scope of the Transition Engagement Questionnaire. Climate
and nature risk guidelines have been developed to support
relationship managers in integrating such considerations in credit
analysis. HSBC credit policies also require manual credit risk rating
overrides if climate and/or nature risk is deemed to have a material
impact on credit risk in the next 12 months, if not already captured
under the original credit risk rating.
Quarterly climate RAS metrics are in place to monitor the exposure of
HSBC Continental Europe corporate lending portfolio to 6 high
transition risk sectors. These metrics aim to balance HSBC
Continental Europe's strategy to support clients in transition while
also ensuring that the overall portfolio climate profile does not
deteriorate. A quarterly monitoring pockets of risk exercise within
HSBC Continental Europe also identifies pockets of higher climate
and/or nature risks, and supports a proactive risk management
approach for these clients.
Treasury risk
Climate and nature risks could impact treasury-related risks through
increased regulatory requirements or from changes to customer
behaviour. From a liquidity and funding perspective, climate and
nature risks could result in increased liquidity outflows in the
immediate term (as the result of a natural disaster or reputational
event, for example), or over the longer-term horizon, lower levels of
stable funding from clients in sectors that are exposed to transition
risks, for example.
As part of the annual ICAAP, HSBC Continental Europe assesses the
impact of climate change on capital, focusing on credit risk, market
risk and operational risk and performs sensitivity analysis.
As part of the annual ILAAP, HSBC Continental Europe assesses how
climate and nature risks could impact the entity’s liquidity position.
This assessment forms part of the annual Internal Climate Scenario
Analysis (‘ICSA’), within which the impact on the entity’s liquidity
position of climate related risks and in particular their impact on
deposits and undrawn commitments from high risk sectors. HSBC
Continental Europe also monitors its deposit base and committed
facilities portfolio by sector to assess its funding exposure to high risk
sectors.
Climate-related topics that may impact Global Treasury are discussed
at climate-related governance forums, including the Treasury Risk
Management Climate Risk Oversight Forum and the Group Treasury
Sustainability Committee.
Traded risk
Climate and nature risks may result in trading losses due to increases
in market volatility and widening spreads from the macro and
microeconomic impacts of transition and physical risks.
Climate and nature risks limits have been implemented in trading
mandates at entity and desk levels to monitor exposure to nature and
climate sensitive sectors and countries across different asset classes
in the Markets and Securities Services (‘MSS‘) business.
Market risk policies include specific risk control requirements, which
ensure that climate and nature risk limits and utilisations are
monitored in the same way as market and traded credit risk
exposures.
Monthly stress testing is conducted to understand the vulnerabilities
of the trading and banking portfolio to various climate and nature
scenarios, which are refined on an annual basis, with the results
reported to senior management.
Reputational risk
HSBC Continental Europe manages the reputational impact of climate
risk through its broader reputational risk framework supported by
sustainability risk policies and metrics.

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HSBC Continental Europe's network of sustainability managers
provide local policy guidance to relationship managers for the
oversight of policy compliance and implementation over wholesale
banking activities.
u For further details of our sustainability risk policies, see page 69.
u For further details of our approach to reputational risk, see https://
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-risk/
reputational-risk.
Regulatory compliance risk
Regulatory Compliance oversees and supports the business in the
management of sustainability-related risks that could cause breaches
of HSBC Continental Europe regulatory duties to customers and
inappropriate market conduct.
HSBC policies include sustainability considerations, particularly in
relation to new and ongoing product management, sales outcomes,
conflicts of interest and product marketing. HSBC Continental Europe
continues to enhance the associated control frameworks, processes
and customer outcomes.
Other risk types
Resilience risk
Physical climate risk may influence resilience risks through impacts on
HSBC Continental Europe buildings, supporting service provision or
on physical and/or transition disruption to HSBC Continental Europe's
third party supply chain.
Metrics to assess how physical risk may impact HSBC Continental
Europe's critical properties and to monitor progress against its
contribution to HSBC Group own operations net zero ambitions are in
place.
Resilience risk policies are subject to continuous review and
improvement to meet climate risk requirements.
Model risk
Model risk in an ESG context refers to the uncertainties and
complexities inherent in the modelling of the financial impact of
climate-related changes and scenarios.
Climate and nature risk models are used for internal climate and
nature scenario analysis, risk management, and emissions reporting
among other use cases. Key challenges, shared across the industry,
include the quality and consistency of data, and assumptions required
to mitigate these inherent model limitations.
Model risk policies and procedures continue to evolve in line with
regulation, setting out the minimum control requirements for
identifying, measuring and managing model risk for climate-related
models.
Financial reporting risk
Climate risk impacts financial reporting risk through increase ESG-
related disclosure requirements in HSBC Continental Europe.
The scope of financial reporting risk includes oversight of the accuracy
and completeness of ESG and climate-related reporting. HSBC
Continental Europe's risk appetite statement states that the Bank has
no appetite for material errors in ESG disclosures, balanced with the
evolving requirements and data availability.
In addition, HSBC Continental Europe internal controls incorporate
requirements for addressing the risk of misstatement in ESG and
climate reporting. To support this, a framework is used to provide
guidance on control implementation over ESG and climate reporting
and disclosures, which includes areas such as process and data
governance, and risk assessment.
Financial Reporting Risk oversight activities have been enhanced
across Continental Europe to address evolving regulatory
requirements. In particular, the Framework has been implemented to
strengthen disclosures, including those mandated by the Corporate
Sustainability Reporting Directive ('CSRD').
Challenges
Key challenges include:
– An increasingly complex and divergent regulatory environment
across jurisdictions;
– The diverse range of internal and external data sources and data
structures needed for climate and nature-related reporting, which
introduces data accuracy and reliability risks
– Industry-wide data gaps on customer emissions and transition plan
and methodology gaps, which limit HSBC Continental Europe
ability to assess transition risks accurately;
– Data limitations on customer assets and supply chains, and
methodology gaps, which hinder HSBC Continental Europe ability
to assess physical risks accurately
– Lack of industry-defined quantified nature scenarios on the market
with limitations of relevant, accurate and granular data for many
nature-related effects.

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‘Duty of Care’
Definition of HSBC Continental Europe's Duty of Care plan
A Duty of Care vigilance plan ('Plan') containing reasonable measures
to identify relevant risks and prevent serious human rights violations,
serious bodily injury, and environmental damage has been defined in
HSBC Continental Europe and implemented in accordance with
French law entered into force on 29 March 2017.
The Plan is supported by:
HSBC Policies and statements, including:
– Diversity and Inclusion policy
– Mental Health policy
– Financial Crime policies
– Sustainability risk policies
– Sustainability Execution Risk policy
– Human Rights Statement
– Health and Safety policy Statement
– Modern Slavery and Human Trafficking Statement
– Whistleblowing Policy and Statement
HSBC Frameworks, including:
– How we succeed outlining HSBC’s ambition, purpose, priorities,
values, and foundations
– Risk management framework and supporting documents
– Reputational Risk Framework
– Approach to manage Human Rights risk
– Climate Risk Approach
– Conduct Approach
– Purpose and Value
– Supplier code of conduct
– Risk Culture Framework
– Principles for the Ethical Use of Data and Artificial Intelligence
– HSBC Continental Europe Approaches to manage Nature and Social
Risks
The HSBC Continental Europe Plan is reviewed regularly to ensure its
accuracy with HSBC's Purpose and Value and with how HSBC
Continental Europe aims to manage and mitigate risks and prevent
serious infringements of human rights and fundamental freedoms, to
safeguard the health and safety of individuals and to protect the
environment.
The Plan is monitored by the HSBC Continental Europe Duty of Care
Steering Committee chaired by HSBC Continental Europe's Head of
ESG Execution with the involvement of HSBC Continental Europe's
Legal, Regulatory Compliance, People, Procurement, Sustainability,
Finance, ESG Risk and Corporate and Institutional Banking ('CIB')
teams.
The Plan covers risks related to HSBC Continental Europe’s
employees, banking activities (including customers), as well as
suppliers and subcontractors.
The risk associated with Duty of Care is incorporated within HSBC
Continental Europe existing policies, risks, and related controls in
place.
The risk associated with Duty of Care law is assessed at least
annually, and where needed for material risk areas identified, HSBC
Continental Europe will take reasonable and proportionate steps to
address and enhance relevant policies and controls to manage this
risk.
The 2025 risk mapping exercise performed has not identified any
material deficiencies in this perimeter.

Duty of Care plan includes the
assessment of the risk related to the
following key themes:
Human rights and fundamental
freedom
Salient human rights
HSBC's approach is guided by the United Nations Guiding Principles
on Business and Human Rights ('UNGPs') and the OECD Guidelines
for Multinational Enterprises on Responsible Business Conduct. As
defined in HSBC Human Rights Statement, HSBC Continental Europe
is committed to safeguard human rights of its workforce, across its
activities and those of its business partners.
An extensive review of HSBC salient human rights issues conducted
in 2022 identified five human rights risks inherent to HSBC’s business
globally, and five types of activity through which such risks might
arise.
These earlier findings have been reviewed in 2025, drawing on
consultations with stakeholders including employees, customers,
investors, public authorities and civil society groups representing
potentially affected people. This review validated HSBC existing
assessment, and no substantive changes have been made to the
table below as a result. Respondents highlighted several developing
issues, including the potential social impacts of AI on communities.

|  | HSBC activities
| Provider of products and services |
Inherent human rights risks | Employer | Buyer | Personal customers | Business customers | Investors
Right to decent work | Freedom from forced labour |  | u |  | u | u
Just and favourable conditions of work | u | u |  | u | u
Right to health and safety at work | u | u |  | u | u
Right to equality and freedom from discrimination | u | u | u | u | u
Right to privacy | u |  | u |  | u
Cultural and land rights |  | u |  | u | u
Right to dignity and justice | u | u | u | u | u

These areas of potential human rights risks identified are considered
in HSBC Continental Europe risk analysis. HSBC Continental Europe is
developing an approach to facilitate the management of social risks,
effective from January 2026. This approach identifies human rights
and fundamental freedoms as key social factors, alongside health and
safety and human capital. The procedure sets out how the Bank aims
to identify suppliers where the risk of human rights impact is
considered to be higher and the process to be followed to review and
seek to mitigate the associated risks.

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In-house capability on human rights continues to be developed with
the launch of further online resources for all staff and bespoke human
rights training for key colleagues, including those managing
relationships with suppliers and business customers, and those with
responsibility for overseeing risk management processes.
In 2025, HSBC continued to focus on its approach to human rights
risk management relating to the goods and services bought from third
parties and in respect of its business customers.
Sustainability risk policies support the management of human rights
risks linked to HSBC Continental Europe business customers
operating in sectors in which the risk of adverse human rights impact
is considered greater. HSBC sustainability risk policies consider
human rights issues such as forced labour, harmful or exploitative
child labour and land rights. They also consider workers’ rights, and
the health and safety of communities.
u More information, see HSBC sustainability risk policies at https://
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-risk/
sustainability-risk.
u More information on the actions taken to respect the right to decent work,
see HSBC 2024 Annual Statement under the UK Modern Slavery Act at
https://www.hsbc.com/who-we-are/esg-and-responsible-business/modern-
slavery-act.
Building an inclusive culture
To help create long-term value for its stakeholders, HSBC focuses on
fostering inclusion and building resilience for its colleagues.
HSBC Continental Europe equally recognises the importance of an
inclusive culture in empowering the organisation to enable the Bank’s
strategic ambition and a lasting societal impact.
HSBC Continental Europe has implemented several initiatives aimed
at embedding an inclusive culture into all aspects of its operations.
This includes (i) training and capability building related to workplace
bias, work discrimination, and inclusion, (ii) embedding its Employee
Resource Groups and (iii) gender pay gap reporting.
Customer's voice
HSBC aims to create opportunities for its customers by making fair
and affordable financial services accessible. With this the Bank
supports them to build financial resilience and confidence, paving the
way for economic opportunities.
HSBC Continental Europe remains committed to improving
customers’ experiences, and, as part of HSBC Group, has continued
to listen, learn, and act on its customers’ feedback and uses the net
promoter system to share feedback with its front-line team, allowing
them to respond directly to their customers.
The complaint handing process deployed in HSBC Continental Europe
aims to register customers complaints in a complaint service tool
called Customer Feedback Tool in CIB allowing to identify complaints
related to ESG topics.
The sensitive claims associated with Duty of Care Law are failure to
provide advice concerning a product or a portfolio managed by the
Bank, which may present regulatory risk, implicate an employee, raise
a discrimination concern, or involve a breach of confidentiality. HSBC
Continental Europe uses an ESG flag in the complaints tool to identify
and monitor all complaints related to Environmental, Social, and
Governance topics.
H ealth and safety
HSBC Continental Europe is committed to providing a safe working
environment for its employees, and non employees as outlined in
HSBC Health and Safety Policy. HSBC Continental Europe is also
committed to protecting and ensuring the physical and mental health
of its employees at their workplace or when travelling for business
purposes.
The HSBC Group also follows several procedures to ensure health
and safety in the workplace:
– complies with regulatory requirements.
– identifies key risks through a risk assessment.
– conducts workplace inspections to ensure workplace safety.
– manages accidents and incidents and looks to mitigate risks to
reduce recurrence.
– provides training and awareness on key risks at HSBC Group.
– sets out clear roles and responsibilities for all stakeholders involved
in health and safety.
– consults with relevant parties on health and safety arrangements, as
appropriate.
u More information, please refer to the Sustainability Statement page 46.
Environmental impact
HSBC Continental Europe prevents, mitigates and controls its material
impacts on the environment in accordance with its sustainability risk
policies, the risk management framework including the climate and
nature related risk approaches and statements.
This includes complying with regulations concerning waste
management, handling of hazardous materials and sourcing of raw
materials. Particular attention is risks relating to climate change and
its impacts on nature considering the complex interactions and
compounding effects of climate and nature related risk drivers.
HSBC has been developing its approach to nature and aligning it with
its net zero approach and is supporting HSBC Continental Europe in
the management of its exposures to environmental risk.
HSBC Continental Europe alongside the wider HSBC Group is
involved in a number of partnerships which focus on Nature based
solutions playing an important role in removing carbon from the
atmosphere. These methods include conserving and restoring natural
ecosystems and managing forests and agricultural lands more
sustainably. Such solutions can also help counter key drivers of the
biodiversity loss currently underway, and support action to tackle
wider drivers of nature loss, including deforestation, overfishing, and
waste.
HSBC Continental Europe has identified and assessed the materiality
of climate and nature-related risks across its activities and risks.
The management of environmental risk is also supported by:
– Imposing restriction through HSBC sustainability risk policies, on
certain financing activities that may have material negative impacts
on nature. Forestry and agricultural commodities policies, focus
specifically on the upstream impacts of the key agricultural
commodities of palm oil, timber, soy and cattle. These policies
require customers involved with these commodities to operate in
accordance with sustainable business principles. It is also required
to palm oil customers to obtain certification under the Roundtable
on Sustainability Palm Oil.

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– Embedding nature into decision-making and customer engagement:
nature-related questions are included into HSBC Continental
Europe’s client transition engagement questionnaire to cover topics
including pollution, water, biodiversity, resource use and circular
economy.
– Engaging with investee companies on biodiversity and natural
resources via HSBC Asset Management Group
– Exploring how nature safeguarding mechanisms could be
incorporated into decision-making.
– Financing and investing in nature-related solutions. HSBC is testing
and scaling approaches to investing in biodiversity and nature.
– Managing HSBC Continental Europe's impacts on nature for its own
operations by being responsible steward and consumer of natural
resources.
– HSBC environmental and sustainability management policies seek
to ensure that HSBC properties including the HSBC Continental
Europe ones, continually reduce their overall direct impact on the
environment.

Suppliers and subcontractors’ risks
assessment
HSBC and HSBC Continental Europe are committed to the fair
treatment of the businesses who supply goods and services to HSBC
and expect them to operate with accountability, in line with HSBC
values.
HSBC’s Sustainable Procurement Procedure supports our sourcing
teams to further integrate sustainability into sourcing strategy and
decision, including new supplier selection, renewals and ongoing
supplier management.
HSBC maintained an inclusive approach to supplier engagement,
supporting fair access to procurement opportunities for all suppliers.
As part of its nature strategy, HSBC has begun developing sustainable
sourcing roadmaps across key sectors, such as support service, IT
service and corporate real estate, following a materiality assessment
of biodiversity and nature risks. The roadmaps will help us address
high-risk areas and include considerations for nature and biodiversity
within our procurement activities.
The HSBC supplier code of conduct was refreshed in 2025, to include
principles on responsible use of AI, setting out ambitions on the
environment, inclusion and human rights, and outlines the minimum
standards the Bank expects from its suppliers on these issues. HSBC
Continental Europe continues to formalise adherence to the code with
clauses in its supplier contracts, which support the right to audit and
act if a breach is discovered. At the end of 2025, 98.4 per cent of
HSBC Continental Europe’ contracted suppliers had either confirmed
adherence to the S upplier Code of Conduct, or provided their own
alternative that was accepted by HSBC Global Procurement function.
HSBC continued to implement human rights due diligence process to
identify supplier risk.
The Global Procurement human rights due diligence operating
procedure describes the process undertaken to identify suppliers
where the risk of adverse human rights impact is considered higher
and the process to be followed to review and mitigate the risk.
HSBC continued its human rights audit programme by selecting
suppliers in scope, completing supplier questionnaires, identifying
suppliers for onsite audits and onboarding a new audit partner to
support delivery.
HSBC also defined an ESG questionnaire covering 3 main themes:
Environment Social Governance (‘ESG’) – General Data Protection
Regulation – Contractual Conditions – with 21 questions including 7
covering Duty of Care and human rights considerations.
u Read more about the principles HSBC applies and HSBC supplier code of
conduct: www.hsbc.com/who-we-are/esg-and-responsible-business/
working-with-suppliers.
u More information, please refer to the Sustainability Statement page 46.

Alert monitoring framework
Whistleblowing channel
HSBC encourages a speak-up culture where individuals can raise any
concerns about wrongdoing or unethical conduct through the normal
reporting channels without fear of reprisal or retaliation. HSBC
provides several channels to speak-up, however it is recognised that
in certain circumstances it may be necessary for individuals to raise
concerns through more targeted and confidential channels.
HSBC strives to create a working environment in which people feel
free to share their concerns. Aware that certain circumstances require
confidentiality, HSBC created a whistleblowing system in 2015 by
creating 'HSBC Confidential'. The arrangements are open to all people
under a professional relationship with HSBC as required by the EU
Directive 2019/137 of 23 October 2019 transposed in local law
reinforcing whistleblower protection.
The whistleblowing channel can be used anonymously by the
whistleblower and is accessible, at any time. Since December 2020,
concerns can now be raised through an independent third party
offering 24/7 hotlines and a web portal in multiple languages,
including local language and English. The arrangements are managed
and supervised by an independent team within the Compliance
function locally or at global level depending on countries.
It can be notably used to report facts or behaviours constituting a
violation of human rights and fundamental freedoms, the health and
safety of persons as well as the environment resulting from the
activities of HSBC Continental Europe as well as those of their
subcontractors or suppliers, in accordance with Law N° 2017-399 of
27 March 2017 relating to the duty of care of parent companies and
ordering companies.
Investigations are conducted confidentially, in depth and
independently by investigators who are trained and made aware of
the legislation/regulations applicable to whistleblowing arrangements.
Alerts received in three countries – France, Germany and Malta – are
fully managed locally while alerts sent by whistleblowers in other
HSBC Continental Europe countries are captured and processed by
HSBC Group in accordance with the processes in place.
There were 20 alerts received and admitted to the HSBC Confidential
alert system in 2025. This compares to 21 received in 2024. The main
theme emerging from the alerts admitted was linked to Poor
Management Practices, Employee Behaviour Issues, and Bullying and
Harassment in the work environment.
Communication and awareness initiatives for employees are sent
periodically to encourage a “speak-up” culture within HSBC. In 2024
and 2025 several awareness sessions on HSBC Speaking Up and
Whistleblowing were delivered in HSBC Continental Europe attended
by more than 3,000 employees. Other sessions are planned across
HSBC Continental Europe’s countries in 2026.

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Refresh training is delivered annually to the Investigation teams who
manage investigations related to whistleblowing cases
In accordance with the law, all eligible persons can use the
whistleblowing channel, in addition to the usual channels, for raising
concerns without fear of retaliation, relating to the following matters:
– a crime or an offence (e.g. corruption, fraud, embezzlement,
harassment, discrimination, etc..).
– a violation or attempt to conceal a violation of an international
standard, law or settlement.
– a threat or serious prejudice to the general interest.
– a violation of human rights and fundamental freedoms, human
health and safety of the environment.
– any situation likely to generate a significant financial or reputational
risk for the Bank.
The whistleblowing oversight team for HSBC Continental Europe is
based in France within the HSBC Continental Europe Compliance
team which monitors activities relating to the whistleblowing
arrangements across the overall HSBC Continental Europe perimeter.
Whistleblowing activity is placed under the responsibility of
Regulatory Compliance and under the supervision of the HSBC Audit
Committee. Investigations on raised cases are conducted, in a
confidential, in depth, and independent manner by investigators from
different departments, mainly from different risk functions, mainly
from Compliance and Human Resources. Controls are in place to
maintain confidentiality and to protect whistleblowers from any form
of retaliation.
In Malta, a local whistleblowing reporting policy is in place, which
provides an official and confidential channel for whistleblowing. The
whistleblowing channels, HSBC Confidential and HSBC Confidential
Malta are opened to all colleagues to raise concerns in line with local
law. All whistleblowing reports received are investigated in a detailed
and independent manner, and remedial action is taken where
appropriate. The oversight of the policy and arrangements falls within
the remit of the HSBC Bank Malta’s Audit Committee.
In Germany, HSBC Confidential as well as a local Ombudsman in
accordance with local law (Hinweisgeberschutzgesetz) are used. The
Ombudsman is an independent and impartial external attorney and is
available to all employees of the branch of HSBC Continental Europe
in Germany. Employees can raise any concerns especially about
breaches of legal/regulatory or internal requirements through these
channels, besides normal reporting channels. Concerns can be raised
anonymously. The alerts are forwarded to the local Whistleblowing
Team which is settled in Compliance. Investigations are conducted in
a confidential and independent manner and actions are taken where
necessary.
Following the transposition of the EU Directive 2019/137 of
23 October 2019, several HSBC Continental Europe countries have
implemented in 2024 a variation of the global arrangement in
designating a local responsible of the local whistleblowing
arrangement (Spain, Italy, Ireland, Luxembourg, Czech Republic,
Poland).
Employee conduct and harassment
HSBC encourages colleagues to speak up about poor behaviour or
things that do not seem right. HSBC Continental Europe measures
confidence to speak up via its Snapshot Speak Up results, which is
stable between 2024 and 2025 (respectively at 80 per cent and 79 per
cent).
Mandatory procedures for handling and investigating employee
concerns are deployed, which include those for bullying and
harassment. Cases are continually monitored from HSBC speak-up
channels, and data is reported to management committees to ensure
there is visibility at leadership level.
HSBC strives to improve awareness and education around poor
behaviours and strengthen its understanding and response to these
issues across all levels of the organisation. In 2024, to ensure
continued high-quality investigations into conduct concerns, six new
investigator training modules aimed at the Human Resources
investigator community, were introduced. They have continued to be
assigned to new joiners in investigator roles throughout 2025.
Training on bullying, harassment, discrimination and retaliation
continue to be delivered at least every other year in HSBC Global
Mandatory Training curriculum and as part of other learning resources,
including in People Manager training.
Between 2022 and 2025, there was a continuous decline in the
number of Personal Conduct Cases ('PCC') at HSBC Continental
Europe (France), from 99 in 2022 to 22 in 2025 (and 44 for HSBC
Continental Europe legal remit), with a stabilisation in the number of
cases related to Duty of Vigilance (Between 1 and 2 each year since
2022). The significant drop in the number of PCC cases since 2024
was mainly explained by the sale of the Retail Business in France at
the end of 2023.

Monitoring measures
Employee feedback
HSBC Continental Europe encourages employees to speak up directly
and collectively about their experiences working at the organisation.
The Bank aims to capture employee feedback in a variety of ways to
understand how colleagues feel about HSBC and to help to improve
the employee experience.
u More information, please refer to the Sustainability Statement page 46.
Individual breaches identifications
HSBC Continental Europe has adopted a process for managing
inappropriate individual breaches. The process aims to identify all
situations in which rules and procedures are not complied with, and to
ensure that cases are treated consistently.
The breaches that HSBC Continental Europe seeks to identify include
cases of money laundering – which may involve activities such as
terrorist financing, human trafficking, or slavery – as well as cases
where the physical safety of staff members is jeopardised and cases
of harassment.
To deal with such situations, each of HSBC Continental Europe’s
business lines and main functions holds breach committee meetings.
For smaller functions and branches, ad-hoc committee meetings are
held if a breach occurs. The aim of these meetings is to assess the
risk level, the circumstances in which the breach occurred and the
level of the breach. If appropriate, sanctions are applied; remedial
action may also be taken to prevent the situation from recurring.
Monitoring indicators have also been adopted.
In 2025, two breaches were dealt with in relation to the Duty of Care
All credible allegations of human rights violations are investigated
through engagement with stakeholders when reported.

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Metrics & Regulatory Watch’s Triggers
Key Risk Indicators have been developed, including litigations losses,
provision amounts and the number of litigation cases. These
indicators are integrated in a quarterly report in order to be monitored
by Legal Department.
A new ESG-related indicator, the number of litigation cases with ESG
consideration has been developed in 2025 and reported in the HSBC
Continental Europe Sustainability Execution Group.
The regulatory watch on litigation cases related to Duty of Care
includes emails alerts and regular updates from the international law
firm, on ESG litigation for Financial Institutions. This supports the
identification of trigger events to be considered when the reported
ESG litigations may apply across HSBC Continental Europe risk
cartography.

Other risks
Reputational risk management
The HSBC Group defines reputational risk as the failure to meet
stakeholders' expectations as a result of any event, behaviour, action
or inaction, either by the HSBC Group itself, its employees or those
with whom the HSBC Group is associated, that might cause
stakeholders to form a negative view of the HSBC Group including
HSBC Continental Europe. Some drivers of reputational risk are
inherent to HSBC Continental Europe business activities and
decisions. This risk must be considered, managed, and/or accepted in
line with the HSBC Continental Europe’s strategy and risk appetite.
The main drivers of reputational risk may include, enterprise actions or
decisions, customers transactions and products, third parties and
partnerships.
Stakeholders’ perceptions are key to reputational risk and may vary
between geographical regions and groups of stakeholders.
Key developments
HSBC Continental Europe has strengthened its reputational risk
controls fram ework by implementing in 2025:
– An a dditional alert tool that aims to identify and screen clients
against ESG Negative News.
– An interactive platform supporting the provision of Reputational and
Sustainable Risk advice to relationship managers on sustainability
policies and reputational concerns.
Governance and structure
Reputational risk is managed in compliance with the HSBC Group’s
risk management framework and is governed through the HSBC
Continental Europe Risk Management Meeting.
The Reputational Risk and Client Selection Committees (‘RRCSC’) are
the decisioning fora which manage reputational risk across the Bank,
with escalation paths to counterparts at Group level and to the HSBC
Continental Europe Risk Management Meeting.
Businesses and functions own and are responsible for managing and
mitigating reputational risks associated with their respective activity.
This responsibility includes setting procedures in line with the HSBC
Group policy and escalating matters to the relevant local RRCSC
which provides guidance, in respect of reputational risk and customer
selection matters, facilitates decision making and ensures that issues
are appropriately tracked and solved. RRCSCs have an escalation path
to the HSBC Continental Europe Risk Management Meeting and to
the Group Reputational Risk Committee in case of significant
reputational risk matters with impacts across the HSBC Group.
Reputational risk is linked to Strategic Risk as a level 2 financial risk in
HSBC Risk Taxonomy and may occur across both non-financial and
financial risk types. Within HSBC Continental Europe’s perimeter,
some operational procedures have been implemented utilising a
reputational risk lens, including financial crime prevention, regulatory
compliance, conduct-related concerns, environmental impacts, human
rights matters and employee relations. In the Second Line of
Defence, given that reputational risks may arise from numerous risk
types in the HSBC Group's Risk Taxonomy, all risk stewards are
ultimately accountable for the oversight of any reputational risk for
their respective risk type. Risk stewards are responsible for defining
and implementing, as necessary, the day-to-day management of
reputational risk for the risks under their responsibility with support
from the reputational risk teams.
Internal Audit provides independent assurance to management and to
the non-executive Risk and Audit Committees that reputational risk
management, governance and internal control processes are
designed and operating effectively.
Everyone at HSBC Continental Europe has the responsibility to
identify potential reputational risk and escalate as appropriate. The
HSBC Continental Europe Chief Risk Officer is accountable for
assessing and deciding reputational risk cases within the HSBC
Continental Europe legal perimeter, and the Chief Executive Officer
owns and is accountable for the management and mitigation of any
residual reputational risk, including escalation to the Region or HSBC
Group Reputational Risk Committee, as appropriate.

Insurable risk coverage
Overview
In certain circumstances, insurance can be used to reduce the
financial impact of residual risks of the HSBC Group's entity, or the
HSBC Group as a whole, should these risks materialise.
Risks that are capable of being insured are called ‘Insurable risks’ and
would typically cover some of the Non-Financial Risks, mainly People
and Operational risks.
HSBC Continental Europe is covered through HSBC Group global
insurance programmes placed by HSBC Holdings plc for major
insurable risks, to protect people, infrastructures and assets.
Main insurance programmes include Directors and Officers liability
insurance, Civil and Cyber liability, Crime (theft or fraud from an
employee or a third-party), Property damages and business
interruption.
Regulatory required local insurance policies are in place in each
country (such as, civil liability for licensed activities, employer’s
liability, construction works, or third-party liability motor insurance).
As a principle, levels of coverage and deductibles/retentions are in line
with:
– insurance market conditions, business practices and regulations;

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– assets values; and
– potential impact on HSBC Continental Europe and HSBC Holdings
plc balance sheets, and risk appetite.
The total amount of insurance premiums paid in 2025 for Non-
Financial risks represents 0.29 per cent of HSBC Continental Europe
net operating income.
Key developments in 2025
In 2025, insured cover limit amounts continue to be set on an
‘extreme’ loss assumption, aiming to mitigate major financial impacts
on the Bank’s activities.
Key initiatives during this year included,
– For property damage and business interruption insurance, HSBC
Continental Europe cover limits have been adjusted based on the
reinstatement value of the portfolio exposure.
– Under the Corporate Services (Real Estate) function’s coordination
and with the support of the Group insurance broker, the HSBC
Group continued to investigate and identify locations potentially
exposed to climate change risks, using total sums insured, including
HSBC Continental Europe sites.
– For crime, civil and cyber liability insurance, entities can adjust their
own deductible levels per loss should the HSBC Group’s deductible
exceed the local entity’s risk appetite.
Governance and structure
At the HSBC Group level, the Insurable Risk Team is a Risk sub-
function who:
– Set the control framework for how insurance solutions are sourced
including the use of insurance intermediaries, and determine where
and how the HSBC Group’s Reinsurance Captive should be
involved.
– Purchase global insurance policies on HSBC Group’s and entities’
behalf, with the approval from the HSBC Group Board of Directors
and other relevant governance committees.
The function includes regional insurable risk managers, responsible to
cascade and embed the HSBC Group’s strategy in their geographies.
The Risk Management Meeting is updated on an annual basis,
concerning all applicable insurance policies and associated costs for
them to opine on the relevance of insurance covers regarding their
risks.
Key risk management processes
Third parties, such as brokers, insurers and partners are chosen in
accordance with their expertise, financial strength and international
network, according to the HSBC Group’s procurement policies and
principles, and managed through the HSBC Group’s Third parties risk
management framework.
The key risk management processes developed by Insurable Risk to
minimise the risk of inappropriate global programme purchasing are:
– Engagement with key stakeholders concerning coverage strategy
and insurance programme priorities.
– Receipt of professional advice prior to binding and post-renewal
reporting from the HSBC Group’s brokers.
– Placement options and renewal proposals are formally approved by
two individuals of appropriate seniority in all cases before binding
instructions are given to the broker.
Periodic control
Overview
In accordance with French ministerial order of 3 November 2014 (the
“Order”), significantly updated on 25 February 2021, concerning
internal control within financial institutions, and payment and
investment service providers, the role of Internal Audit is to provide
Executive Management and HSBC Continental Europe Board of
Directors objective assurance on risk management and the internal
control system implemented by the bank. Periodic controls on HSBC
Continental Europe aim to ascertain the compliance of operations, the
levels of risk actually incurred by the institution, due observance of
the procedures and the effectiveness and appropriateness of the
control frameworks, by means of independent investigations
conducted by staff qualified for this purpose.
As part of HSBC Group’s risk management framework, Global Internal
Audit constitutes the Third Line of Defence, coming successively
behind the businesses and functions’ own First Line of Defence (Risk
Owners, Control Owners and Chief Control Officers) and the Second
Line of Defence teams (Enterprise Risk Management, Assurance
Teams and Risk Stewards). While the control work performed by First
and Second Lines of Defence is assessed and taken into account,
Global Internal Audit defines its own programme of work
independently from them as Internal Audit is responsible for providing
Executive Management and the Board of Directors of the bank,
independent assurance on the risk exposure and level of control by
management.
As such, Internal Audit assesses the compliance with laws applicable
to the audited area, the correct application of rules and procedures in
force within HSBC Group and the adherence of audited activities to
the risk appetite defined by the Bank.
In accordance with article 27 of the Order, the periodic control
framework applies to the entire HSBC Continental Europe company,
including its European branches and subsidiaries, as well as to
companies under exclusive or joint control.
Key developments in 2025
All audit work is performed in accordance with HSBC Group’s audit
standards, as set out in the Audit Instruction Manual, which is
updated on a regular basis.
Several methodological changes were introduced:
– To increase management accountability, Global Internal Audit no
longer re-writes Management Self-Identified Issues. This
responsibility was transferred to issue owners who have to correct
deficiencies identified in the writing of Management Self-Identified
Issues during the audit. Audit reports assess the quality of
Management Self-Identified Issue write ups and duplicate them as
they are written in Helios, the HSBC risk management system.
– Issue validation is not done at action level anymore but rather at the
overall issue level for High and Medium Risk issues. The validation
timelines for Global Internal Audit have also been increased: from 30
days for all the actions to 45 days for the High Risk issues and 60
days for the Medium Risks issues.
– To evaluate the design and operating effectiveness of relevant key
controls for entities in the Audit Universe, an indicative Control
Assessment rating is automatically calculated by considering all
open issues, irrespective of source (either Audit Identified Issues,
Management-Self Identified Issues or Third-Party Issues). This
automated rating is challenged and potentially overridden
considering prior audit ratings and conclusions on the effectiveness

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of key controls as well as incidents, near misses or events not
captured as issues.
– The Topical Requirements from the Institute of Internal Auditors for
cybersecurity provide a consistent, comprehensive approach to
assess the design and operating effectiveness of cybersecurity
governance, risk management, and control processes. These
requirements represent a minimum baseline for assessing
cybersecurity which Global Internal Audit applies for all relevant
audits.
– The approach to scope limitations has been clarified. Global Internal
Audit remains alert to any scope limitations that may restrict work
throughout audits. Limitations may arise coincidentally or if business
stakeholders seek to impose constraints on audit approaches.
Scope limitations are conditions, such as resource constraints or
restrictions on access to personnel, facilities, data, and information,
that prevent Global Internal Audit from performing the expected
audit work. If the limitation is significant, the Audit Owner escalates
to the Group Head of Internal Audit who has the option to report it
to the Group Audit Committee. Global Internal Audit documents
scope limitations and includes them in the audit reports, typically
through reporting a non-cooperation statement.
Governance and structure
Global Internal Audit is made of nine global audit teams whose role is
to provide expert coverage of HSBC Group’s businesses, functions
and geographies:
– International Wealth and Personal Banking ('IWPB');
– Corporate and Institutional Banking ('CIB') and Europe;
– Strategy, Governance, Risk and Finance;
– Compliance, Financial Crime, Conduct, Culture, Legal and
Sustainability;
– Chief Information Office ('CIO') and Change Oversight;
– Chief Operating Office and Other Specialist Infrastructure;
– Hong Kong, Asia and Middle East;
– United Kingdom; and
– Americas.
Global Internal Audit Continental Europe is an audit team, whose
responsibility is to cover the risks within the HSBC Continental
Europe legal perimeter (Belgium, Czech Republic, France, Germany,
Ireland, Italy, Luxembourg, Malta, Netherlands, Poland, Spain and
Sweden). Its auditors are based in France, Germany, Malta,
Luxembourg and Poland.
HSBC Continental Europe periodic control is therefore covered jointly
by different Global Internal Audit entities, functionally linked and
coordinated:
– Global Internal Audit Continental Europe, a general audit team,
mainly reviewing central functions, corporate banking, banking
operations, Information Technology and strategically significant
projects; and
– Global teams, specialised by business and/or function, based
principally in London and in Hong Kong. Members of these global
teams are also located in Paris, for Corporate and Institutional
Banking audit, Asset Management audit, Model Risk audit and
Traded Risk audit.
Country audit teams have the detailed knowledge of local regulations
and environment enabling coverage to be adapted as appropriate, and
functional reporting to the global audit function strengthens their
independence and ensures consistency between teams, all of whom
are held to the high standards defined and regularly updated in the
Audit Instruction Manual. The fact that all teams share a reporting line
into a global function promotes collaboration and the sharing of best
practices.
Periodic controls on HSBC Continental Europe in 2025 have thus been
performed either by Global Audit teams, Continental Europe Audit
teams or by both together, in accordance with the service agreement,
which is effective since April 2017.
The scopes of local audits and global audits converge and are
consolidated in the HSBC Continental Europe audit plan. In all cases,
as defined in the aforementioned Order, all audits on HSBC
Continental Europe are managed in coordination with the Head of
Global Internal Audit Continental Europe, who oversees their
consistency and efficiency.
The Head of Global Internal Audit Continental Europe reports to the
Head of Internal Audit for Corporate and Institutional Banking ('CIB')
and Europe and to the HSBC Continental Europe Audit Committee,
and administratively to the HSBC Continental Europe Chief Executive
Officer.
Finally, the HSBC Continental Europe Internal Audit function is a
member of the Inter‑Audit Committee (“Comité Inter-Inspections
Générales”), which gathers internal audit departments of eight French
banks to perform common audits of vendors providing services to at
least four members, as required by title V, chapter II of the Order.
This approach to jointly audit common service providers is also
mentioned in the European Banking Authority guidelines on
outsourcing arrangements that were issued in February 2019.
Key risk management processes
In addition to regular discussions held with Global Internal Audit, other
elements contribute to maintaining an independent and up to date
view of key risks within HSBC Continental Europe, in particular:
– The Head of Global Internal Audit Continental Europe participates in
the HSBC Continental Europe Operating Committee, the HSBC
Continental Europe Risk Management Meeting and the HSBC
Continental Europe Audit Committee and those of its subsidiaries in
France;
– The Senior Audit Managers participate in the risk committees of
various businesses and functions;
– Regular meetings, usually quarterly, are held between Global
Internal Audit Continental Europe senior management and the
different heads of businesses and functions; and
– Quarterly meetings are held between Global Internal Audit
Continental Europe senior management and external auditors.
Audit reports are sent to the accountable executives, who are
ultimately responsible for ensuring that all findings are timely and
properly remediated. The HSBC Continental Europe Chief Executive
Officer, the HSBC Continental Europe Chief Risk Officer, the HSBC
Continental Europe Chief Operating Officer, the HSBC Continental
Europe Chief Compliance Officer and the HSBC Continental Europe
Head of Enterprise Risk Management receive a copy of all audit
reports.
Audit reports relating to HSBC Continental Europe and subject to an
adverse rating (i.e., a Not Satisfactory Control Rating or a Negative
Active Risk Management Rating) are always presented and
commented by the Head of Global Internal Audit Continental Europe
during the HSBC Continental Europe Audit Committee.
This Committee also monitors outstanding Very High, High and
Medium risk audit issues.
Global Internal Audit is validating the closure of the issues. The level
of validation that is needed varies based on the issue rating.

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Risk review

Tax risk
Overview
The HSBC Group seeks to apply the spirit and the letter of the law in
all territories where it operates. In line with the Group's principles and
its own, HSBC Continental Europe ensures compliance with
applicable tax regulations across Continental Europe and payment of a
fair share of tax in the countries where it operates.
Therefore, HSBC Continental Europe does not undertake transactions
whose sole purpose is to abuse the tax system or otherwise employ
tax avoidance strategies, for example by artificially diverting profits to
low tax jurisdictions.
HSBC Continental Europe does not deal with customers who are not
tax transparent or who may want to use its products to avoid taxation.
HSBC Continental Europe will use tax incentives or opportunities for
obtaining tax efficiencies where these:
– Are aligned with the intended policy objectives of the relevant
government; and
– Are aligned with business or operational objectives.
Moreover, within the framework of intra-group transactions, HSBC
Continental Europe ensures that all the prices applied are in line with
arm's length principles, as defined by the OECD rules.
Key developments in 2025
HSBC continues to apply global initiatives to improve tax transparency
such as:
– The OECD Standard for Automatic Exchange of Financial Account
Information (also known as the Common Reporting Standard);
– The Foreign Account tax compliance Act (also known as FATCA);
– The Capital Requirements Directive IV (‘CRD IV’) Country by Country
reporting;
– The OECD Base Erosion and Profit Shifting (‘BEPS’) initiative pillars
1 and 2;
– DAC6 disclosure of aggressive operations;
– The Global Electronic system of Payment information (CESOP)
reporting; and
– The e-invoicing for VAT purposes.
Governance and structure
The Tax Department ("Direction des Affaires Fiscales") is composed
by tax experts located both in France and in Germany including a local
senior management, under the superv ision of the Head of Tax for
Continental Europe.The Tax Department oversees tax risks as a
Second Line of Defence across Continental Europe, relying on local
tax experts and/or local law firms.
In order to ensure a coherent tax policy and a risk management, the
Tax Department:
– defines the tax guidelines that businesses must follow to limit risk,
in line with the risk appetite;
– ensures that procedures and proper controls are in place to mitigate
tax risk;
– ensures that recommendations from Third Line of Defence and/or
any regulator relating to tax are followed; and
– has a proper information of all the major transactions and projects to
assess any potential tax implication/risk.
The Tax Department also assists different committees where tax
approval is requested and is part of due diligence process for new
products.
Key risk management process
Tax risk is managed in accordance with HSBC Continental Europe risk
management framework, which defines minimum standards and
processes, and the governance structure for the risk management
across HSBC Continental Europe.
Responsibility for minimising operational risk lies with all HSBC
employees. Specifically, all staff are required to manage operational
risks, including tax risks of the business and operational activities for
which they are responsible.
The Tax Policy covers three key risks:
– Tax payments – risk of failure to withhold, charge or pay taxes;
– Tax compliance – risk of failure to report and file accurate tax returns
including customer information; and
– Tax avoidance – risk that HSBC Continental Europe enters into
transactions on its own account or promotes products and services
to customers that are not consistent with the spirit of the law (tax
avoidance).
HSBC Continental Europe manages the three key tax risks by:
– Identifying the risks;
– Ensuring that the right controls are in place to prevent, manage and
reduce risk;
– Setting policy and guidelines for managing tax risks;
– Providing support and guidance to support the above policies; and
– Employing an experienced, professionally qualified in-house tax
team. The in-house tax team is supported by advice from external
advisers whenever in-house expertise is not available.
Global Internal Audit is responsible for providing independent
assurance that HSBC is managing tax risk effectively.

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Consolidated financial statements

Contents
191 | Consolidated income statement
192 | Consolidated statement of comprehensive income
193 | Consolidated balance sheet
194 | Consolidated statement of changes in equity
196 | Consolidated statement of cash flows

Notes on the consolidated financial
statements

Contents
198 | 1 | Basis of preparation and material accounting policies
212 | 2 | Assets held for sale, liabilities of disposal groups held for sale and discontinued operations
213 | 3 | Net fee income
214 | 4 | Net income/(expense) from financial instruments measured at fair value through profit or loss (continuing operations)
215 | 5 | Insurance business
220 | 6 | Employee compensation and benefits
224 | 7 | Auditors’ remuneration
225 | 8 | Tax
227 | 9 | Dividends
227 | 10 | Earnings per share
228 | 11 | Segmental analysis
229 | 12 | Trading assets
229 | 13 | Fair values of financial instruments carried at fair value
235 | 14 | Fair values of financial instruments not carried at fair value
236 | 15 | Financial assets designated and otherwise mandatorily measured at fair value through profit or loss
236 | 16 | Derivatives
239 | 17 | Financial investments
240 | 18 | Assets pledged, collateral received and assets transferred
241 | 19 | Related information on foreign subsidiaries and branches country by country
241 | 20 | Structured entities
243 | 21 | Goodwill and intangible assets
245 | 22 | Prepayments, accrued income and other assets
246 | 23 | Trading liabilities
246 | 24 | Financial liabilities designated at fair value
247 | 25 | Accruals, deferred income and other liabilities
247 | 26 | Provisions
248 | 27 | Subordinated liabilities
248 | 28 | Maturity analysis of financial assets, liabilities and off-balance sheet commitments
250 | 29 | Offsetting of financial assets and financial liabilities
251 | 30 | Called up share capital and other equity instruments
252 | 31 | Contingent liabilities, contractual commitments and guarantees
253 | 32 | Finance lease receivables
253 | 33 | Legal proceedings and regulatory matters relating to HSBC Group entities generally
254 | 34 | Related party transactions
256 | 35 | Events after the balance sheet date
256 | 36 | HSBC Continental Europe subsidiaries, joint ventures and associates
258 | Statutory Auditors’ report on the consolidated financial statements

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Consolidated income statement

for the year ended 31 December
|  | 2025 | 2024 1
| Notes | €m | €m
Continuing operations |  |  |
Net interest income |  | 1,382 | 1,695
– interest income |  | 6,242 | 8,219
– interest expense |  | (4,860) | (6,524)
Net fee income | 3 | 1,180 | 1,214
– fee income | 3 | 1,845 | 1,755
– fee expense | 3 | (665) | (541)
Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 4 | 818 | 484
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 4 | 39 | 40
Changes in fair value of designated debt and related derivatives | 4 | 2 | 3
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 4 | 35 | 63
Gains less losses from financial investments |  | 7 | (2)
Insurance finance income/(expense) | 5 | (34) | (38)
Insurance service result |  | 10 | 18
– insurance service revenue |  | 21 | 26
– insurance service expense |  | (11) | (8)
Gains/(losses) recognised on assets held for sale |  | 143 | (11)
Other operating income/(expense) |  | 101 | 81
Net operating income before change in expected credit losses and other credit impairment charges |  | 3,683 | 3,547
Change in expected credit losses and other credit impairment charges |  | (166) | (91)
Net operating income |  | 3,517 | 3,456
Total operating expenses |  | (2,792) | (2,318)
– employee compensation and benefits | 6 | (1,319) | (1,007)
– general and administrative expenses |  | (1,288) | (1,214)
– depreciation and impairment of property, plant and equipment and right of use assets |  | (109) | (62)
– amortisation and impairment of intangible assets and goodwill impairment | 21 | (76) | (35)
Profit/(loss) before tax |  | 725 | 1,138
Tax expense | 8 | (64) | (406)
Profit/(loss) after tax in respect of continuing operations |  | 661 | 732
Profit/(loss) after tax in respect of discontinued operations | 2 | (1,305) | (129)
Profit/(loss) for the year |  | (644) | 603
Attributable to: |  |  |
– shareholders of the parent company |  | (657) | 568
– non-controlling interests in respect of continuing operations |  | 13 | 35
– non-controlling interests in respect of discontinued operations | 2 | — | —
Basic earnings per ordinary share | 10 | (2.47) | 2.65
Diluted earnings per ordinary share | 10 | (2.47) | 2.65
Dividends per ordinary share | 9 | 1.06 | —

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

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Consolidated financial statements

Consolidated statement of comprehensive income

for the year ended 31 December
|  | 2025 | 2024 1
| Notes | €m | €m
Profit/(loss) for the period from continuing operations |  | 661 | 732
Other comprehensive income/(expense) |  |  |
Items that will be reclassified subsequently to profit or loss when specific conditions are met: |  |  |
Debt instruments at fair value though other comprehensive income: |  | 80 | 3
– fair value gains/(losses) |  | 115 | 3
– fair value (gains)/losses transferred to the income statement on disposal |  | (7) | 4
– expected credit losses recognised in income statement |  | 2 | —
– income taxes |  | (30) | (4)
Cash flow hedges: |  | (85) | 86
– fair value gains/(losses) | 16 | (116) | (111)
– fair value (gains)/losses reclassified to the income statement | 16 | 3 | 228
– income taxes | 16 | 28 | (31)
Exchange differences and other |  | 5 | 2
Items that will not be reclassified subsequently to profit or loss: |  |  |
Remeasurement of defined benefit asset/liability: |  | 18 | 3
– before income taxes | 6 | 24 | 5
– income taxes |  | (6) | (2)
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk: |  | (81) | (20)
– before income taxes | 24 | (112) | (26)
– income taxes |  | 31 | 6
Equity instruments designated at fair value through other comprehensive income: |  | 17 | (4)
– fair value gains/(losses) |  | 17 | (4)
– income taxes |  | — | —
Other comprehensive income/(expense) for the period, net of tax |  | (46) | 70
Total comprehensive income/(expense) for the period from continuing operations |  | 615 | 802
Total comprehensive income/(expense) for the period from discontinued operations | 2 | (1,277) | (118)
Attributable to: |  |  |
– shareholders of the parent company |  | (676) | 648
– non-controlling interests in respect of continuing operations |  | 14 | 36
– non-controlling interests in respect of discontinued operations |  | — | —
Total comprehensive income/(expense) for the period |  | (662) | 684

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

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Consolidated financial statements

Consolidated balance sheet

at 31 December
|  | 2025 | 2024
| Notes | €m | €m
Assets |  |  |
Cash and balances at central banks |  | 58,092 | 48,907
Trading assets | 12 | 30,801 | 22,853
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 15 | 1,619 | 1,563
Derivatives | 16 | 40,579 | 43,251
Loans and advances to banks 1 |  | 5,715 | 5,703
Loans and advances to customers 1 |  | 42,835 | 51,288
Reverse repurchase agreements – non-trading |  | 29,308 | 25,764
Financial investments | 17 | 28,003 | 20,740
Assets held for sale | 2 | 377 | 25,477
Prepayments, accrued income and other assets | 22 | 12,684 | 17,998
Current tax assets |  | 164 | 595
Goodwill and intangible assets | 21 | 319 | 219
Deferred tax assets | 8 | 895 | 650
Total assets |  | 251,391 | 265,008
Liabilities |  |  |
Deposits by banks |  | 14,514 | 11,820
Customer accounts |  | 97,107 | 97,065
Repurchase agreements – non-trading |  | 14,486 | 12,344
Trading liabilities | 23 | 18,376 | 16,480
Financial liabilities designated at fair value | 24 | 11,086 | 9,906
Derivatives | 16 | 33,178 | 41,857
Debt securities in issue |  | 14,129 | 15,257
Liabilities of disposal groups held for sale | 2 | 10,648 | 24,718
Accruals, deferred income and other liabilities | 25 | 21,221 | 17,848
Current tax liabilities |  | 208 | 236
Insurance Contract Liabilities | 5 | 531 | 518
Provisions | 26 | 444 | 184
Deferred tax liabilities | 8 | 3 | 3
Subordinated liabilities | 27 | 1,894 | 1,941
Total liabilities |  | 237,825 | 250,177
Equity |  |  |
Called up share capital | 30 | 1,328 | 1,328
Share premium account | 30 | 6,747 | 6,747
Other equity instruments | 9 | 1,230 | 1,430
Other reserves |  | 1,552 | 1,574
Retained earnings |  | 2,524 | 3,563
Total shareholders’ equity |  | 13,381 | 14,642
Non-controlling interests |  | 185 | 189
Total equity |  | 13,566 | 14,831
Total liabilities and equity |  | 251,391 | 265,008

1 The loans and advances to banks and customers include expected credit losses provided under IFRS 9. Further analysis of expected credit losses is disclosed in
the table 'Summary of financial instruments to which the impairment requirements in IFRS 9 are applied' under section ‘Credit Risk'.

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Consolidated financial statements

Consolidated statement of changes in equity
for the year ended 31 December

|  |  |  | Other reserves |  |  |
| Called up share capital and share premium | Other equity instru- ments | Retained earnings | Financial assets at Fair Value through OCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Merger reserve and other reserves | Insurance finance reserve | Total share- holders’ equity | Non- controlling interests | Total equity
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2025 | 8,075 | 1,430 | 3,563 | (638) | 23 | — | 1,609 | 580 | 14,642 | 189 | 14,831
Profit/(loss) for the period from continuing operations | — | — | 648 | — | — | — | — | — | 648 | 13 | 661
Other comprehensive income/(expense) (net of tax) | — | — | (63) | 98 | (85) | 3 | — | — | (47) | 1 | (46)
– debt instruments at fair value through other comprehensive income | — | — | — | 79 | — | — | — | — | 79 | 1 | 80
– equity instruments designated at fair value through other comprehensive income | — | — | — | 17 | — | — | — | — | 17 | — | 17
– cash flow hedges | — | — | — | — | (85) | — | — | — | (85) | — | (85)
– re-measurement of defined benefit asset/ liability | — | — | 18 | — | — | — | — | — | 18 | — | 18
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk | — | — | (81) | — | — | — | — | — | (81) | — | (81)
– 'Insurance finance income/(expense) recognised in other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
– exchange differences | — | — | — | 2 | — | 3 | — | — | 5 | — | 5
Total comprehensive income/(expense) for the period from continuing operations | — | — | 585 | 98 | (85) | 3 | — | — | 601 | 14 | 615
Total comprehensive income/(expense) for the period from discontinued operations | — | — | (1,305) | 618 | — | (10) | — | (580) | (1,277) | — | (1,277)
– capital securities issued during the period | — | — | — | — | — | — | — | — | — | — | —
– dividends to shareholders 1 | — | — | (380) | — | — | — | — | — | (380) | (18) | (398)
– other movements 2 | — | (200) | 61 | 2 | — | — | (68) | — | (205) | — | (205)
Total Other | — | (200) | (319) | 2 | — | — | (68) | — | (585) | (18) | (603)
At 31 Dec 2025 | 8,075 | 1,230 | 2,524 | 80 | (62) | (7) | 1,541 | — | 13,381 | 185 | 13,566

1 Dividends to shareholders comprise an interim dividend distribution of EUR 282 million (EUR 1.06 per share) for the year 2025, along with a EUR 98 million
coupon payment on Additional Tier 1 (AT1) capital instruments. This comprises a EUR 14 million dividend recognised for 2025, payable in April 2026, relating to
the EUR 200 million Perpetual Subordinated Resettable AT1 instrument (issued in 2019), which was reclassified from equity to liabilities.
2 Following ECB approval in December 2025 for the redemption of the EUR 200 million Perpetual Subordinated Resettable Additional Tier 1 instrument (issued in
2019), the instrument was reclassified from equity to liabilities as at 31 December 2025. The principal repayment of the instrument was completed on 2 January
2026.

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Consolidated financial statements

Consolidated statement of changes in equity (continued)
for the year ended 31 December 1

|  |  |  | Other reserves |  |  |
| Called up share capital and share premium | Other equity instru- ments | Retained earnings | Financial assets at Fair Value through OCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Merger reserve and other reserves | Insurance finance reserve | Total share- holders’ equity | Non- controlling interests | Total equity
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2024 | 6,326 | 1,433 | 3,103 | (763) | (63) | (6) | 1,603 | 709 | 12,342 | 166 | 12,508
Profit/(loss) for the period from continuing operations | — | — | 697 | — | — | — | — | — | 697 | 35 | 732
Other comprehensive income/(expense) (net of tax) | — | — | (17) | (3) | 86 | 3 | — | — | 69 | 1 | 70
– debt instruments at fair value through other comprehensive income | — | — | — | 2 | — | — | — | — | 2 | 1 | 3
– equity instruments designated at fair value through other comprehensive income | — | — | — | (4) | — | — | — | — | (4) | — | (4)
– cash flow hedges | — | — | — | — | 86 | — | — | — | 86 | — | 86
– re-measurement of defined benefit asset/ liability | — | — | 3 | — | — | — | — | — | 3 | — | 3
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk | — | — | (20) | — | — | — | — | — | (20) | — | (20)
– 'Insurance finance income/(expense) recognised in other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
– exchange differences and other | — | — | — | (1) | — | 3 | — | — | 2 | — | 2
Total comprehensive income/(expenses) for the period from continuing operations | — | — | 680 | (3) | 86 | 3 | — | — | 766 | 36 | 802
Total comprehensive income/(expense) for the period from discontinued operations | — | — | (129) | 138 | — | 2 | — | (129) | (118) | — | (118)
– capital securities issued | 1,749 | (3) | — | — | — | — | — | — | 1,746 | — | 1,746
– dividends to shareholders 1 | — | — | (83) | — | — | — | — | — | (83) | (13) | (96)
– other movements | — | — | (8) | (10) | — | 1 | 6 | — | (11) | — | (11)
Total Other | 1,749 | (3) | (91) | (10) | — | 1 | 6 | — | 1,652 | (13) | 1,639
At 31 Dec 2024 | 8,075 | 1,430 | 3,563 | (638) | 23 | — | 1,609 | 580 | 14,642 | 189 | 14,831

1 Dividends corresponds to coupon payment on other equity instrument (AT1 capital) amounting to EUR 83 million.

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Consolidated financial statements

Consolidated statement of cash flows

for the year ended 31 December
|  | 2025 | 2024 1
| Notes | €m | €m
Continuing operations |  |  |
Profit/(loss) before tax |  | 725 | 1,138
Adjustments for non-cash items: |  | 1,419 | (344)
– depreciation, amortisation and impairment of property plant and equipment, right of use and intangibles |  | 185 | 96
– net gain from investing activities |  | (8) | (1)
– change in expected credit losses gross of recoveries and other credit impairment charges |  | 172 | 100
– provisions including pensions |  | 297 | 9
– share-based payment expense | 6 | 26 | 22
– other non-cash items included in profit before tax |  | (71) | (80)
– (Gain)/loss on acquisition/disposal of subsidiaries and businesses 2 |  | (149) | —
– elimination of exchange differences 3 |  | 967 | (490)
Changes in operating assets and liabilities |  | 6,317 | (6,246)
– change in net trading securities and derivatives |  | (12,207) | (8,424)
– change in loans and advances to banks and customers |  | 2,383 | (2,165)
– change in reverse repurchase agreements – non-trading |  | (4,248) | (3,931)
– change in financial assets designated at fair value and otherwise mandatorily measured at fair value |  | (154) | (629)
– change in other assets 4 |  | 2,397 | 1,189
– change in deposits by banks and customer accounts |  | 12,560 | 6,668
– change in repurchase agreements – non-trading |  | 2,142 | 1,191
– change in debt securities in issue |  | (1,128) | 2,348
– change in financial liabilities designated at fair value |  | 954 | 309
– change in other liabilities |  | 3,500 | (2,613)
– tax paid |  | 118 | (189)
Net cash from operating activities |  | 8,461 | (5,452)
Purchase of financial investments |  | (18,254) | (9,956)
Proceeds from the sale and maturity of financial investments |  | 10,448 | 3,658
Net cash flows from the purchase and sale of property plant and equipment |  | (14) | (13)
Net investment in intangible assets |  | (176) | (69)
Net cash flow on disposal of subsidiaries, business, associates and joint ventures 5,6 |  | 5,089 | (430)
Net cash from investing activities |  | (2,907) | (6,810)
Issue of ordinary share capital and other equity instruments | 30 | — | 1,745
Subordinated loan capital issued | 27 | 500 | 500
Subordinated loan capital repaid | 27 | (541) | (510)
Dividends paid to shareholders of the parent company | 9 | (380) | (83)
Dividends paid to non-controlling interests |  | (18) | (13)
Net cash from financing activities |  | (439) | 1,639
Net cash from discontinued operations | 2 | (336) | (9,501)
Net increase/(decrease) in cash and cash equivalents |  | 4,779 | (20,124)
Cash and cash equivalents at beginning of the period 4 |  | 75,742 | 95,653
Exchange differences in respect of cash and cash equivalents |  | (278) | 213
Cash and cash equivalents at 31 Dec 4 |  | 80,243 | 75,742

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Consolidated financial statements

Consolidated statement of cash flows (continued)

for the year ended 31 December
|  | 2025 | 2024 1
| Notes | €m | €m
Cash and cash equivalents comprise of: |  |  |
– cash and balances at central banks 7 |  | 58,092 | 48,907
– loans and advances to banks of one month or less |  | 5,250 | 4,572
– reverse repurchase agreement with banks of one month or less |  | 12,795 | 13,498
– cash collateral, net settlement accounts and items in course of collection from/transition to other banks 4 |  | 4,092 | 6,799
– cash and cash equivalents held for sale/discontinued operations 8 |  | 14 | 1,966
Cash and cash equivalents at 31 Dec 4 |  | 80,243 | 75,742

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Represents gain on disposal of private banking business in Germany EUR 149 million.
3 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be
determined without unreasonable expense.
4 Following a classification error in the consolidated statement of cash flow in 2024, Cash and cash equivalents have been represented by EUR 30 million at the
beginning of the comparative period i.e., 1 January 2024 and by EUR 265 million at the end of the comparative period i.e., 31 December 2024 as well as at the
beginning of the current period i.e., 1 January 2025 with the net impact on cash and cash equivalents of EUR 235 million within Changes in operating activities
for the comparative period ending 31 December 2024. This representation does not impact the presentation of the balance sheet.
5 Net cash flow on disposal for 2025 represents, the net cash proceeds on sale of the life insurance business in France EUR 843 million, retained portfolio of
home and certain other loans in France EUR 5 billion, net cash outflow on sale of private banking business in Germany EUR 799 million.
6 Net cash flow on disposal for 2024 represents the net impact of EUR 0.4 billion additional cash paid on sale of retail banking operations in France in January
2024 (Out of the total sale proceeds of EUR 9.9 billion, EUR 9.5 billion was reclassified as held for sale at 31 December 2023 of which 'Loans and advances to
banks’ for EUR 9.3 billion and ‘Cash and balances at central banks’ for EUR 0.2 billion) and EUR 38 million net on sale of HSBC Epargne Enterprise to Natixis
Interépargne in November 2024.
7 At 31 December 2025, EUR 5.1 billion (2024: EUR 7.8 billion) was not available for use by HSBC Continental Europe due to a range of restrictions including
mandatory deposits and other restrictions.
8 At 31 December 2025, includes EUR 14 million related to planned sale of custody business in Germany (loans and advances to banks of one month or less EUR
13 million, Settlement accounts with Banks of one month or less EUR 1 million). At 31 December 2024, includes EUR 1.8 billion related to planned sale of
Private Banking business in Germany (cash and balances at central banks EUR 1.8 billion) and EUR 139 million related to the planned sale of the life insurance
business in France (loans and advances to banks of one month or less EUR 139 million).
Interest received was EUR 7,043 million of which discontinued operations was EUR 445 million (2024: EUR 8,932 million of which discontinued
operations was EUR 424 million). Interest paid was EUR 5,763 million of which discontinued operations was EUR 402 million) (2024: EUR
7,530 million of which discontinued operations was EUR 111 million). Dividends received EUR 83 million (2024: EUR 43 million).

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Notes on the consolidated financial statements

Notes on the consolidated financial
statements
1 Basis of preparation and material accounting policies
The consolidated financial statements of HSBC Continental Europe are available upon request from the HSBC Continental Europe registered
office at 38 Avenue Kléber – 75116 Paris or on the websites www.hsbc.com and www.hsbc.fr.
These consolidated financial statements were approved by the Board of Directors on 24 February 2026.
1.1 Basis of preparation
(a)Compliance with International Financial Reporting Standards
The consolidated financial statements of HSBC Continental Europe have been prepared in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board (‘IASB’), including interpretations issued by the IFRS Interpretations Committee, and
have also applied international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union (‘EU’). There were no unendorsed standards effective for the year ended 31 December 2025 affecting these consolidated financial
statements.
I FRS Accounting S tandards adopted during the year ended 31 December 2025
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting
policies have been applied consistently.
(b)Future accounting developments
Minor amendments to IFRS Accounting Standards
The International Accounting Standards Board ('IASB') has published a number of minor amendments to IFRS Accounting Standards that are
effective from 1 January 2026. HSBC Continental Europe expects they will have an insignificant effect, when adopted, on the consolidated
financial statements.
Other amendments and new IFRS Accounting Standards
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’
In May 2024, the IASB issued amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’, effective for
annual reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed
settled when using an electronic payment system, the amendments also provide further clarification regarding the classification of financial
assets that contain contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related
contingencies, and financial assets with certain non-recourse features. HSBC Continental Europe does not expect any material impact from
these amendments.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
In April 2024, the IASB issued IFRS 18 ‘Presentation and Disclosure in Financial Statements’, effective for annual reporting periods beginning
on or after 1 January 2027. The new accounting standard aims to give users of financial statements more transparent and comparable
information about an entity’s financial performance. It will replace IAS 1 ‘Presentation of Financial Statements’ but carries over many
requirements from that IFRS Accounting Standard unchanged. In addition, there are three sets of new requirements relating to the structure of
the income statement, management-defined performance measures and the aggregation and disaggregation of financial information.
While IFRS 18 will not change recognition criteria or measurement bases, it will have an impact on presenting information in the financial
statements, in particular the income statement and to a lesser extent the cash flow statement. The HSBC Continental Europe is currently
evaluating impacts and ensuring data readiness is adequate in anticipation of implementation.
(c)Foreign currencies
The functional currency of HSBC Continental Europe is euro which is also the presentational currency of HSBC Continental Europe's
consolidated financial statements.
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Assets and liabilities denominated in
foreign currencies are translated at the rate of exchange at the balance sheet date except non-monetary assets and liabilities measured at
historical cost, which are translated using the rate of exchange at the initial transaction date. Exchange differences are recognised in other
comprehensive income or in the income statement except where otherwise required such as exchange components of gains and losses on
non-monetary items which are recognised in the income statement or other comprehensive income depending on where the gain or loss on
the underlying item is presented.
In the consolidated financial statements, the assets and liabilities of branches, subsidiaries, joint ventures and associates whose functional
currency is not euro are translated into HSBC Continental Europe’s presentation currency at the rate of exchange at the balance sheet date,
while their results are translated into euro at the average rates of exchange for the reporting period. Exchange differences arising are
recognised in other comprehensive income. On disposal of a foreign operation, exchange differences previously recognised in other
comprehensive income are reclassified to the income statement.
(d)Presentation of information
Certain disclosures required by IFRS Accounting Standards have been included in the audited sections of this Universal Registration Document
2025 as follows:
– disclosures concerning the nature and extent of risks relating to financial instruments other than insurance risk are included in the 'Risk' section
on pages 123 to 189 and
– the 'Own funds' disclosure is included in the ‘Capital’ section on page 166.

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Notes on the consolidated financial statements

(e)Critical estimates and judgements
The preparation of financial information requires the use of estimates and judgements about future conditions. In view of the inherent
uncertainties and the high level of subjectivity involved in the recognition or measurement of items, highlighted as the 'critical estimates and
judgements' in section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management’s
estimates are based. This could result in materially different estimates and judgements from those reached by management for the purposes
of these financial statements. Management’s selection of HSBC Continental Europe’s accounting policies that contain critical estimates and
judgements reflects the materiality of the items to which the policies are applied and the high degree of judgement and estimation uncertainty
involved.
Management has considered the impact of climate-related risks on HSBC Continental Europe’s financial position and performance. While the
effects of climate change are a source of uncertainty, as at 31 December 2025 management did not consider there to be a material impact on
our critical judgements and estimates from the physical, transition and other climate-related risks in the short to medium term. In particular,
management has considered the known and observable potential impacts of climate-related risks of associated judgements and estimates in
our value in use calculations.
(f)Going concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that HSBC Continental Europe has the resources
to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information
relating to present and future conditions, including future projections of profitability, liquidity, capital requirements and capital resources.
These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment, including ongoing supply chain
disruptions, uncertain inflation, rapidly changing interest rates, the impact of the Russia-Ukraine war and conflict in the Middle East, heightened
strategic competition between US and China, potential trade restrictions and tariffs, as well as the potential impacts from other top and
emerging risks, including climate change, as well as the related impacts on profitability, capital and liquidity.
1.2 Summary of material accounting policies
(a)Consolidation and related policies
Consolidation
HSBC Continental Europe consolidates entities that it controls as demonstrated by power over the investee, exposure to variable returns, and
the ability to use its power to affect the amount of its returns. Where an entity is governed by voting rights, HSBC Continental Europe generally
has power leading to control when it holds - directly or indirectly - the necessary voting rights to pass resolutions by the governing body. In all
other cases, the assessment of control is more complex and requires judgement of other factors, including contractual arrangements.
Business combinations are accounted for using the acquisition method. The amount of non-controlling interest is measured either at fair value
or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. This election is made for each business
combination.
HSBC Continental Europe sponsored structured entities
HSBC Continental Europe is considered to sponsor another entity if, in addition to ongoing involvement with the entity, it has a key role in
establishing that entity or in bringing together relevant counterparties so the transaction that is the purpose of the entity could occur. HSBC
Continental Europe is generally not considered a sponsor if the only involvement with the entity is merely administrative.
Interests in associates and joint arrangements
Joint arrangements are investments in which HSBC Continental Europe, together with one or more parties, has joint control. Depending on
HSBC Continental Europe’s rights and obligations, the joint arrangement is classified as either a joint operation or a joint venture.
HSBC Continental Europe classifies investments in entities over which it has significant influence but not control or joint control as associates
and accounts for them using the equity method. Under this method the attributable share of net assets, results and reserves are included in the
consolidated financial statements based on either financial statements made up to 31 December or pro-rated amounts adjusted for any material
transactions or events occurring between the date the financial statements are available and 31 December.
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication that the
investment may be impaired, by comparing the recoverable amount of the relevant investment to its carrying amount. Goodwill on acquisition
of interests in joint ventures and associates is not tested separately for impairment, but is assessed as part of the carrying amount of the
investment.
(b)Impairment of goodwill and other non-financial assets
Goodwill
Goodwill is allocated to cash-generating units (‘CGUs’) for the purpose of impairment testing, which is undertaken at the lowest level at which
goodwill is monitored for internal management purposes.
HSBC Continental Europe's CGUs are the global businesses within principal operating entities. Impairment testing is performed once a year, or
whenever there is an indication of impairment, by comparing the recoverable amount of a CGU with its carrying amount.
Goodwill is included in a disposal group if the disposal group is a CGU to which goodwill has been allocated or it is an operation within such a
CGU. The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the
portion of the CGU retained.

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Notes on the consolidated financial statements

Other non-financial assets
Software under development is tested for impairment at least annually. Other non-financial assets are property, plant and equipment, intangible
assets (excluding goodwill) and right-of-use assets. They are tested for impairment at the individual asset level when there is indication of
impairment at that level, or at the CGU level for assets that do not have a recoverable amount at the individual asset level. In addition,
impairment is also tested at the CGU level when there is indication of impairment at that level. Impairment testing compares the carrying
amount of the non-financial asset or CGU with its recoverable amount, which is the higher of the fair value less costs of disposal or the value in
use. The carrying amount of a CGU comprises the carrying amount of its assets and liabilities, including non-financial assets that are directly
attributable to it and non-financial assets that can be allocated to it on a reasonable and consistent basis. Non-financial assets that cannot be
allocated to an individual CGU are tested for impairment at an appropriate grouping of CGUs. The recoverable amount of the CGU is the higher
of the fair value less costs of disposal of the CGU, which is determined by independent and qualified valuers where relevant, and the value in
use, which is calculated based on appropriate input s (see Note 22).
When the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognised in the income statement to the
extent that the impairment can be allocated on a pro-rata basis to the non-financial assets by reducing their carrying amounts to the higher of
their respective individual recoverable amount or nil. Impairment is not allocated to the financial assets in a CGU.
Impairment losses recognised in prior periods for non-financial assets are reversed when there has been a change in the estimate used to
determine the recoverable amount. The impairment loss is reversed to the extent that the carrying amount of the non-financial assets would
not exceed the amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in prior
periods.
Critical estimates and judgements
The review of goodwill and non-financial assets for impairment reflects management’s best estimate of the future cash flows of the CGUs and
the rates used to discount these cash flows, both of which are subject to uncertain factors as follows:

Judgements | Estimates
– The accuracy of forecast cash flows is subject to a high degree of uncertainty in volatile market conditions. Where such circumstances are determined to exist, management re-tests goodwill for impairment more frequently than once a year when indicators of impairment exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management's best estimate of future business prospects. | – The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they reflect management’s view of future business prospects at the time of the assessment. – The rates used to discount future expected cash flows can have a significant effect on their valuation, and are based on the costs of equity assigned to individual CGUs. The cost of equity percentage is generally derived from a capital asset pricing model and market implied cost of equity, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control. – Key assumptions used in estimating goodwill impairment are disclosed in Note 21.

(c)Net operating income
Interest income and expense
Interest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value are
recognised in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method. However, as an exception
to this, interest on debt instruments issued by HSBC Continental Europe for funding purposes that are designated under the fair value option to
reduce an accounting mismatch and on derivatives managed in conjunction with those debt instruments is included in interest expense.
Interest on credit-impaired financial assets is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount
of the asset less allowance for expected credit losses).
Non-interest income and expense
HSBC Continental Europe generates fee income from services provided over time, such as account service and card fees, or when HSBC
Continental Europe delivers a specific transaction at a point in time such as broking services and import/export services. Where fees are
variable, for example certain fund management and performance fees, such fees are recognised when the associated uncertainties are
resolved, and to the extent that it is highly probable that a significant reversal will not occur.
HSBC Continental Europe acts as principal in the majority of contracts with customers, with the exception of broking services. For most
brokerage trades HSBC Continental Europe acts as agent in the transaction and recognises broking income net of fees payable to other parties
in the arrangement.
HSBC Continental Europe recognises fees earned on transaction-based arrangements at a point in time when it has provided the service to the
customer. Where the contract requires services to be provided over time, income is recognised on a systematic basis over the life of the
agreement.
Where HSBC Continental Europe offers a package of services that contains multiple non-distinct performance obligations, such as those
included in account service packages, the promised services are treated as a single performance obligation. If a package of services contains
distinct performance obligations, the corresponding transaction price is allocated to each performance obligation based on the estimated stand-
alone selling prices.
Dividend income is recognised when the right to receive payment is established.

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Notes on the consolidated financial statements

Gains and losses from financial instruments measured as at fair value through profit or loss includes the following:
– ‘Net income from financial instruments held for trading or managed on a fair value basis’. This comprises net trading activities, which includes
all gains and losses from changes in the fair value of financial assets and financial liabilities held for trading and other financial instruments
managed on a fair value basis, together with the related interest income, interest expense and dividend income, excluding the effect of
changes in the credit risk of liabilities managed on a fair value basis. It also includes all gains and losses from changes in the fair value of
derivatives that are managed in conjunction with financial assets and liabilities measured at fair value through profit or loss.
– ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or
loss’. This includes all gains and losses from changes in the fair value, together with related interest income, interest expense and dividend
income in respect of financial assets and liabilities measured at fair value through profit or loss; and those derivatives managed in conjunction
with the above that can be separately identifiable from other trading derivatives.
– Other gains and losses from financial instruments measured as at fair value through profit or loss include changes in the fair value of designated
debt instruments under the fair value option and related derivatives where such designation reduces an accounting mismatch. Interest on such
debt instruments and interest cash flows on related derivatives is presented in interest expense. Also included are the changes in fair value of
other financial instruments mandatorily measured as at fair value through profit or loss which includes interest on instruments that fail the SPPI
test. See (e) below.
Insurance income and expense
Insurance service result
Insurance revenue reflects the consideration to which HSBC Continental Europe expects to be entitled in exchange for the provision of coverage and
other insurance contract services (excluding any investment components). Insurance service expenses comprise the incurred claims and other incurred
insurance service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of such losses.
Insurance finance income and expenses
Insurance finance income and expense comprises the change in the carrying amount of the group of insurance contracts arising from the
effects of the time value of money, financial risk and changes therein. For contracts using the variable fee approach measurement model
(‘VFA’), changes in the fair value of underlying items (excluding additions and withdrawals) are recognised in insurance finance income or
expenses.
(d)Valuation of financial instruments
Financial instruments are initially recognised at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date and on initial recognition is generally the transaction
price. However, if there is a difference between the transaction price and the fair value of financial instruments whose fair value is based on a
quoted price in an active market or a valuation technique that uses only data from observable markets, HSBC Continental Europe recognises
the difference as a trading gain or loss at inception (a ‘day 1 gain or loss’). In all other cases, the entire day 1 gain or loss is deferred and
recognised in the income statement over the life of the transaction until the transaction matures, is closed out, the valuation inputs become
observable or HSBC Continental Europe enters into an offsetting transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC Continental Europe
manages a group of financial assets and liabilities according to its net market or credit risk exposure, the fair value of the group of financial
instruments is measured on a net basis but the underlying financial assets and liabilities are presented separately in the financial statements,
unless they satisfy the IFRS offsetting criteria. Financial instruments are classified into one of three fair value hierarchy levels, described in Note
13, ‘Fair values of financial instruments carried at fair value'.
Critical estimates and judgements
The majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of
valuation techniques that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is
more judgemental:

Judgements | Estimates
– An instrument in its entirety is classified as valued using significant unobservable inputs if, in the opinion of management, greater than 5 per cent of the instrument’s valuation is driven by unobservable inputs. – Unobservable’ in this context means that there is little or no current market data available from which to determine the price at which an arm’s length transaction would be likely to occur. It generally does not mean that there is no data available at all upon which to base a determination of fair value (consensus pricing data may, for example, be used). | – Details on HSBC Continental Europe’s level 3 financial instruments and the sensitivity of their valuation to the effect of applying reasonably possible alternative assumptions in determining their fair value are set out in Note 13.

(e)Financial instruments measured at amortised cost
Financial assets that are held to collect the contractual cash flows and which contain contractual terms that give rise on specified dates to cash
flows that are solely payments of principal and interest are measured at amortised cost. Such financial assets include most loans and advances
to banks and customers and some debt securities. In addition, most financial liabilities are measured at amortised cost. HSBC Continental
Europe accounts for regular way amortised cost financial instruments using trade date accounting. The carrying amount of these financial
assets at initial recognition includes any directly attributable transactions costs.
HSBC Continental Europe may commit to underwriting loans on fixed contractual terms for specified periods of time. When the loan arising
from the lending commitment is expected to be sold shortly after origination, the commitment to lend is recorded as a derivative. When HSBC

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Continental Europe intends to hold the loan, the loan commitment is generally not recognised but is subject to expected credit loss
considerations.
Financial assets are reclassified only when the business model for their management changes. Such changes, which are expected to be
infrequent, are determined by senior management as a result of external or internal changes and must be significant to operations and
demonstrable to external parties. Reclassifications are applied prospectively from the first day of the first reporting period following the change
of business model. Where a financial asset is reclassified out of the amortised cost measurement category and into the fair value through other
comprehensive income measurement category its fair value is measured at the date of reclassification. Any gain or loss arising from a
difference between the previous amortised cost and fair value is recognised in other comprehensive income. The effective interest rate and the
measurement of expected credit losses are not adjusted as a result of the reclassification.
Non-trading reverse repurchase, repurchase and similar agreements
When securities are sold subject to a commitment to repurchase them at a predetermined price (‘repos’), they remain on the balance sheet and
a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (‘reverse repos’) are not
recognised on the balance sheet and an asset is recorded in respect of the initial consideration paid. Non-trading repos and reverse repos are
measured at amortised cost. The difference between the sale and repurchase price or between the purchase and resale price is treated as
interest and recognised in net interest income over the life of the agreement.
Contracts that are economically equivalent to reverse repurchase or repurchase agreements (such as sales or purchases of securities entered
into together with total return swaps with the same counterparty) are accounted for similarly to, and presented together with, reverse
repurchase or repurchase agreements.
(f)Financial assets measured at fair value through other comprehensive income (‘FVOCI’)
Financial assets managed within a business model that is achieved by both collecting contractual cash flows and selling and which contain
contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at FVOCI.
These comprise primarily debt securities. They are generally recognised on the trade date when HSBC enters into contractual arrangements to
purchase and are generally derecognised when they are either sold or redeemed. They are subsequently remeasured at fair value with changes
therein (except for those relating to impairment, interest income and foreign currency exchange gains and losses) are recognised in other
comprehensive income until the assets are sold. Upon disposal, the cumulative gains or losses in other comprehensive income are recognised
in the income statement. Financial assets measured at FVOCI are included in impairment calculations and impairment is recognised in profit or
loss.
(g)Equity securities measured at fair value with fair value movements presented in other
comprehensive income (‘OCI’)
Equity securities for which fair value movements are shown in other comprehensive income are business facilitation and other similar
investments where HSBC Continental Europe holds the investments other than to generate a capital return. Dividends from such investments
are recognised in profit or loss. Gains or losses on the derecognition of these equity securities are not transferred to profit or loss. Otherwise,
equity securities are measured at fair value through profit or loss.
(h)Financial instruments designated at fair value through profit or loss
Financial instruments, other than those held for trading, are classified in this category if they meet one or more of the criteria set out below and
are so designated irrevocably at inception:
– The use of the designation removes or significantly reduces an accounting mismatch;
– A group of financial assets and liabilities or a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy; and
– A financial liability that contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC Continental Europe enters into contracts with counterparties, which is generally on
trade date, and are normally derecognised when the rights to the cash flows expire or are transferred.
Designated financial liabilities are recognised when HSBC Continental Europe enters into contracts with counterparties, which is generally on
settlement date, and are normally derecognised when extinguished. Subsequent changes in fair values are recognised in the income statement
except for the effect of changes in the liabilities' credit risk, which is presented in 'Other comprehensive income', unless that treatment would
create or enlarge an accounting mismatch in profit or loss.
Under the above criteria, the main classes of financial instruments designated by HSBC Continental Europe are:
– Debt instruments for funding purposes that are designated to reduce an accounting mismatch: The interest and/or foreign exchange exposure
on certain fixed-rate debt securities issued has been matched with the interest and/or foreign exchange exposure on certain swaps as part of a
documented risk management strategy.
– Financial assets and financial liabilities under unit-linked and non-linked investment contracts: A contract under which HSBC does not accept
significant insurance risk from another party is not classified as an insurance contract, other than investment contracts with discretionary
participation features (‘DPF’), but is accounted for as a financial liability. Customer liabilities under linked and certain non-linked investment
contracts issued by insurance subsidiaries are determined based on the fair value of the assets held in the linked funds or by a valuation
method. The related financial assets and liabilities are managed and reported to management on a fair value basis.
– Designation at fair value of the financial assets and related liabilities allows changes in fair values to be recorded in the income statement and
presented in the same line.
– Financial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance evaluated
on a fair value basis.

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(i)Derivatives
Derivatives are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices.
Derivatives are recognised initially and are subsequently measured at fair value through profit or loss. Derivatives are classified as assets when
their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities which are
bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis.
Where the derivatives are managed with debt securities issued by HSBC Continental Europe that are designated at fair value where doing so
reduces an accounting mismatch, the contractual interest is shown in ‘Interest expense’ together with the interest payable on the issued debt.
Hedge accounting
When derivatives are not part of fair value designated relationships, if held for risk management purposes they are designated in hedge
accounting relationships where the required criteria for documentation and hedge effectiveness are met. HSBC Continental Europe uses these
derivatives or, where allowed, other non-derivative hedging instruments in fair value hedges, cash flow hedges or hedges of net investments in
foreign operations as appropriate to the risk being hedged.
Fair value hedge
Fair value hedge accounting does not change the recording of gains and losses on derivatives and other hedging instruments, but results in
recognising changes in the fair value of the hedged assets or liabilities attributable to the hedged risk that would not otherwise be recognised in
the income statement. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is discontinued, and the
cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income
statement on a recalculated effective interest rate, unless the hedged item has been derecognised, in which case it is recognised in the income
statement immediately.
Cash flow hedge
The effective portion of gains and losses on hedging instruments is recognised in other comprehensive income and the ineffective portion of
the change in fair value of derivative hedging instruments that are part of a cash flow hedge relationship is recognised immediately in the
income statement. The accumulated gains and losses recognised in other comprehensive income are reclassified to the income statement in
the same periods in which the hedged item affects profit or loss. When a hedge relationship is discontinued, or partially discontinued, any
cumulative gain or loss recognised in other comprehensive income remains in equity until the forecast transaction is recognised in the income
statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified to the income statement.
(j)Impairment of amortised cost and FVOCI financial assets
Expected credit losses are recognised for loans and advances to banks and customers, non-trading reverse repurchase agreements, other
financial assets held at amortised cost, debt instruments measured at fair value through other comprehensive income, and certain loan
commitments and financial guarantee contracts. At initial recognition, an allowance (or provision in the case of some loan commitments and
financial guarantees) is recognised for ECL resulting from possible default events within the next 12 months, or less, where the remaining life is
less than 12 months, (’12-month ECL’). In the event of a significant increase in credit risk, an allowance (or provision) is recognised for ECL
resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets where 12-month
ECL is recognised are considered to be ‘stage 1’; financial assets which are considered to have experienced a significant increase in credit risk
are in ‘stage 2’; and financial assets for which there is objective evidence of impairment and so are considered to be in default or otherwise
credit-impaired are in ‘stage 3’. Purchased or originated credit-impaired financial assets ('POCI') are treated differently as set out below.
Unimpaired and without significant increase in credit risk – (Stage 1)
ECL resulting from default events that are possible within the next 12 months (’12-month ECL’) are recognised for financial instruments that
remain in stage 1.
Significant increase in credit risk (Stage 2)
An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering
the change in the risk of default occurring over the remaining life of the financial instrument.
The assessment explicitly or implicitly compares the risk of default occurring at the reporting date compared with that at initial recognition,
taking into account reasonable and supportable information, including information about past events, current conditions and future economic
conditions. The assessment is unbiased, probability-weighted, and to the extent relevant, uses forward-looking information consistent with that
used in the measurement of ECL. The analysis of credit risk is multifactor. The determination of whether a specific factor is relevant and its
weight compared with other factors depends on the type of product, the characteristics of the financial instrument and the borrower, and the
geographical region. Therefore, it is not possible to provide a single set of criteria that will determine what is considered to be a significant
increase in credit risk and these criteria will differ for different types of lending, particularly between retail and wholesale.
However, unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when
30 days past due. In addition, wholesale loans that are individually assessed, which are typically corporate and commercial customers, and
included on a watch or worry list are included in stage 2.
For wholesale portfolios, the quantitative comparison assesses default risk using a lifetime probability of default ('PD'), which encompasses a
wide range of information including the obligor’s customer risk rating (‘CRR’), macro-economic condition forecasts and credit transition
probabilities. For origination CRRs up to 3.3, significant increase in credit risk is measured by comparing the average PD for the remaining term
estimated at origination with the equivalent estimation at reporting date.

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The quantitative measure of significance varies depending on the credit quality at origination as follows:

Origination CRR | Significance trigger – PD to increase by
0.1–1.2 | 15 bps
2.1–3.3 | 30 bps

For CRRs greater than 3.3 that are not impaired, a significant increase in credit risk is considered to have occurred when the origination PD has
doubled. The significance of changes in PD was informed by expert credit risk judgement, referenced to historical credit migrations and to
relative changes in external market rates.
For loans originated prior to the implementation of IFRS 9, the origination PD does not include adjustments to reflect expectations of future
macroeconomic conditions since these are not available without the use of hindsight. In the absence of this data, origination PD must be
approximated assuming through-the-cycle PDs and through-the-cycle migration probabilities, consistent with the instrument’s underlying
modelling approach and the CRR at origination.
The quantitative comparison is supplemented with additional CRR deterioration based thresholds as set out in the table below:

Origination CRR | Additional significance criteria – Number of CRR grade notches deterioration required to identify as significant credit deterioration (stage 2) (> or equal to)
0.1 | 5 notches
1.1–4.2 | 4 notches
4.3–5.1 | 3 notches
5.2–7.1 | 2 notches
7.2–8.2 | 1 notch

u Further information about the 23-grade scale used for CRR can be found on page 139.
For retail portfolios, default risk is assessed using a reporting date 12-month PD derived from internal models, which incorporate all available
information about the customer. This PD is adjusted for the effect of macroeconomic forecasts for periods longer than 12 months and is
considered to be a reasonable approximation of a lifetime PD measure. Retail exposures are first segmented into homogenous portfolios,
generally by country, product and brand. Within each portfolio, the stage 2 accounts include accounts with an adjusted 12-month PD greater
than the average 12-month PD of loans in that portfolio 12 months before they become 30 days past due. The expert credit risk judgement is
that no prior increase in credit risk is significant. This portfolio-specific threshold therefore identifies loans with a PD higher than would be
expected from loans that are performing as originally expected and higher than that which would have been acceptable at origination. It
therefore approximates a comparison of origination to reporting date PDs.
HSBC Continental Europe continues to refine the retail transfer criteria approach for certain portfolios, as additional data becomes available, in
order to utilise a more relative approach. These enhancements take advantage of the increase in origination related data in the assessment of
significant increases in credit risk by comparing remaining lifetime PD to the comparable remaining term lifetime PD at origination based on
portfolio-specific origination segments.
Credit-impaired (Stage 3)
HSBC Continental Europe determines that a financial instrument is credit-impaired and in Stage 3 by considering relevant objective evidence,
primarily whether:
– contractual payments of either principal or interest are past due for more than 90 days;
– there are other indications that the borrower is unlikely to pay such as that a concession has been granted to the borrower for economic or legal
reasons relating to the borrower’s financial condition; or
– the loan is otherwise considered to be in default.
If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due. Therefore, the
definitions of credit-impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or
otherwise credit-impaired.
Interest income is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount less allowance for ECL).
Write-off
Financial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of
recovery. Where loans are secured, this is generally after receipt of any proceeds from the realisation of security. In circumstances where the
net realisable value of any collateral has been determined and there is no reasonable expectation of further recovery, write-off may be earlier.
Forbearance
Loans are identified as forborne and classified as either performing or non-performing when HSBC Continental Europe modifies the contractual
terms due to financial difficulty of the borrower. Non-performing forborne loans are stage 3 and classified as non-performing until they meet the
curing criteria, as specified by applicable credit risk policy (for example, when the loan is no longer in default and no other indicators of default
have been present for at least 12 months). Any amount written off as a result of any modification of contractual terms upon entering
forbearance would not be reversed.

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HSBC Continental Europe applies the EBA Guidelines on the application of definition of default for our retail portfolios, which affect credit risk
policies and our reporting in respect of the status of loans as credit impaired principally due to forbearance (or curing thereof). Further details
are provided under 'Forborne loans and advances' on pages 156 – 157.
Performing forborne loans are initially stage 2 and remain classified as forborne until they meet applicable curing criteria (for example, they
continue to not be in default and no other indicators of default are present for a period of at least 24 months). At this point, the loan is either
stage 1 or stage 2 as determined by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms)
and the risk of a default occurring at initial recognition (based on the original, unmodified contractual terms).
A forborne loan is derecognised if the existing agreement is cancelled and a new agreement is made on substantially different terms, or if the
terms of an existing agreement are modified such that the forborne loan is a substantially different financial instrument. Any new loans that
arise following derecognition events in these circumstances would generally be classified as POCI and will continue to be disclosed as
forborne.
Loan modifications other than forborne loans
Loan modifications that are not identified as forborne are considered to be commercial restructurings. Where a commercial restructuring results
in a modification (whether legalised through an amendment to the existing terms or the issuance of a new loan contract) such that HSBC’s
rights to the cash flows under the original contract have expired, the old loan is derecognised and the new loan is recognised at fair value. The
rights to cash flows are generally considered to have expired if the commercial restructuring is at market rates and no payment-related
concession has been provided. Modifications of certain higher credit risk wholesale loans are assessed for derecognition having regard to
changes in contractual terms that either individually or in combination are judged to result in a substantially different financial instrument.
Mandatory and general offer loan modifications that are not borrower-specific, for example market-wide customer relief programmes, generally
do not result in derecognition, but their stage allocation is determined considering all available and supportable information under our ECL
impairment policy.
Purchased or originated credit-impaired ('POCI')
Financial assets that are purchased or originated at a deep discount that reflects the incurred credit losses are considered to be POCI. This
population includes new financial instruments recognised in most cases following the derecognition of forborne loans. The amount of change in
lifetime ECL for a POCI loan is recognised in profit or loss until the POCI loan is derecognised, even if the lifetime ECL are less than the amount
of ECL included in the estimated cash flows on initial recognition.
Movement between stages
Financial assets can be transferred between the different categories (other than POCI) depending on their relative increase in credit risk since
initial recognition. Financial instruments are transferred out of stage 2 if their credit risk is no longer considered to be significantly increased
since initial recognition based on the assessments described above. In the case of non-performing forborne loans such financial instruments are
transferred out of stage 3 when they no longer exhibit any evidence of credit impairment and meet the curing criteria as described above.
Measurement of ECL
The assessment of credit risk, and the estimation of ECL, are unbiased and probability-weighted, and incorporate all available information which
is relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future
events and economic conditions at the reporting date. In addition, the estimation of ECL takes into account the time value of money and
considers other factors such as climate-related risks.
In general, HSBC Continental Europe calculates ECL using three main components, a probability of default ('PD'), a loss given default ('LGD')
and the exposure at default (‘EAD’).
The 12-month ECL is calculated by multiplying the 12-month PD, LGD and EAD. Lifetime ECL is calculated using the lifetime PD instead. The
12-month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument
respectively.
The EAD represents the expected balance at default, taking into account the repayment of principal and interest from the balance sheet date to
the default event together with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the
event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and
the time value of money.

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HSBC Continental Europe makes use of the IRB framework where possible, with recalibration to meet the differing IFRS 9 requirements as set
out in the following table:

Model | Regulatory capital | IFRS 9
PD | – Represents long-run average PD throughout a full economic cycle (for mortgage portfolios a hybrid approach, which sits between the extremes of point in time and through the cycle, is used for calculating long-run averages as required by the PRA) – Default backstop of 90+ days past due for all portfolios (includes unlikely to pay ('UTP') criteria in line with internal policy) – May be subject to a sovereign cap | – Represents current portfolio quality and performance, adjusted for the impact of multiple forward-looking macroeconomic scenarios – Default backstop of 90+ days past due for all portfolios (includes UTP criteria in line with internal policy)
EAD | – Cannot be lower than current balance | – Amortisation captured for term products – Future drawdown captured for revolving products
LGD | – Downturn LGD (consistent with losses HSBC Continental Europe would expect to suffer during a severe but plausible economic downturn) – Regulatory floors may apply to mitigate risk of underestimating downturn LGD due to lack of historical data – Discounted using appropriate index (minimum 9 per cent) – All collection costs included | – LGD based on recent portfolio performance data and includes the expected impact of future economic conditions such as change in the value of collateral – No floors applied, discounted using the original effective interest rate – Only costs associated with selling collateral and certain third-party costs are included
Other |  | – Discounted back from point of default to balance sheet date

While 12-month PDs are recalibrated from IRB models where possible, the lifetime PDs are determined by projecting the 12-month PD using a
term structure. For the wholesale methodology, the lifetime PD also takes into account credit migration, i.e. a customer migrating through the
CRR bands over its life.
The ECL for wholesale stage 3 is determined primarily on an individual basis using a discounted cash flow (‘DCF’) methodology. The expected
future cash flows are based on estimates as of the reporting date, reflecting reasonable and supportable assumptions and projections of future
recoveries and expected future receipts of interest.
Collateral is taken into account if it is likely that the recovery of the outstanding amount will include realisation of collateral based on its
estimated fair value of collateral at the time of expected realisation, less costs for obtaining and selling the collateral.
The cash flows are discounted at the original effective interest rate. For significant cases, cash flows under up to four different scenarios are
probability-weighted by reference to the status of the borrower, economic scenarios applied more generally by HSBC Continental Europe and
judgement of in relation to the likelihood of the workout strategy succeeding or receivership being required. For less significant cases where an
individual assessment is undertaken, the effect of different economic scenarios and work-out strategies results in an ECL calculation based on
a most likely outcome which is adjusted to capture losses resulting from less likely but possible outcomes. For certain less significant cases,
the bank may use an LGD-based modelled approach to ECL assessment, which factors in a range of economic scenarios.
Period over which ECL is measured
Expected credit loss is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it
12-month or lifetime ECL) is the maximum contractual period over which HSBC Continental Europe is exposed to credit risk. However, where
the financial instrument includes both a drawn and undrawn commitment and the contractual ability to demand repayment and cancel the
undrawn commitment does not serve to limit HSBC Continental Europe exposure to credit risk to the contractual notice period, the contractual
period does not determine the maximum period considered. Instead, ECL is measured over the period HSBC Continental Europe remains
exposed to credit risk that is not mitigated by credit risk management actions. This applies to retail overdrafts and credit cards, where the
period is the average time taken to realise the material losses for an account determined on a portfolio basis and ranging from between two
and six years. In addition, for these facilities it is not possible to identify the ECL on the loan commitment component separately from the
financial asset component.
As a result, the total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of
the financial asset, in which case the ECL is recognised as a provision. For wholesale overdraft facilities, credit risk management actions are
taken no less frequently than on an annual basis.
Forward-looking economic inputs
HSBC Continental Europe applies multiple forward-looking global economic scenarios determined with reference to external forecast
distributions representative of its view of forecast economic conditions. This approach is considered sufficient to calculate unbiased expected
credit loss in most economic environments. In certain economic environments, additional analysis may be necessary and may result in
additional scenarios or adjustments, to reflect a range of possible economic outcomes sufficient for an unbiased estimate. The detailed
methodology is disclosed in 'Measurement uncertainty and sensitivity analysis of ECL estimates' on page 148.

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Critical estimates and judgements
The calculation of ECL under IFRS 9 requires HSBC Continental Europe to make a number of judgements, assumptions and estimates. The
most significant are set out below:

JUDGEMENTS – Defining what is considered to be a significant increase in credit risk. – Selecting and calibrating the PD, LGD and EAD models, which support the calculations, including making reasonable and supportable judgements about how models react to current and future economic conditions. – Selecting model inputs and economic forecasts, including determining whether sufficient and appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss. – Making management judgemental adjustments to account for late breaking events, model and data limitations and deficiencies, and expert credit judgements. – Selecting applicable recovery strategies for certain wholesale credit-impaired loans. | ESTIMATES The section ‘Measurement uncertainty and sensitivity analysis of ECL estimates’ on page 148 sets out the assumptions used in determining ECL and provides an indication of the sensitivity of the result to the application of different weightings being applied to different economic assumptions.

(k)Insurance contracts
A contract is classified as an insurance contract where the entity accepts significant insurance risk from another party by agreeing to
compensate that party if it is adversely affected by a specified uncertain future event. An insurance contract may also transfer financial risk, but
is accounted for as an insurance contract if the insurance risk is significant. In addition, HSBC Continental Europe issues investment contracts
with discretionary participation features ('DPF') which are also accounted under IFRS 17 ‘Insurance Contracts’.
Aggregation of insurance contracts
Individual insurance contracts that are managed together and subject to similar risks are identified as a portfolio. Contracts that are managed
together usually belong to the same product group, and have similar characteristics such as being subject to a similar pricing framework or
similar product management, and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the
contract is used to assess whether the contract features similar risks. Each portfolio is further separated by the contract’s expected profitability.
The portfolios are split by their profitability into: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no
significant possibility of becoming onerous subsequently; and (iii) the remaining contracts. These profitability groups are then divided by issue
date, with most contracts the HSBC Continental Europe issues after the transition date being grouped into calendar quarter or annual cohorts.
For multi-currency groups of contracts, the HSBC Continental Europe considers its groups of contracts as being denominated in a single
currency. HSBC Continental Europe did not elect to apply the annual cohorts exemption.
The measurement of the insurance contract liability is based on groups of insurance contracts as established at initial recognition, and will
include fulfilment cash flows as well as the contractual service margin (CSM) representing the unearned profit. The HSBC Continental Europe's
accounting policy to update the estimates used in the measurement on a year-to-date basis.
Fulfilment cash flows
The fulfilment cash flows comprise the following:
Best estimates of future cash flows
The cash flows within the contract boundary of each contract in the HSBC Continental Europe include amounts expected to be collected from
premiums and payouts for claims, benefits and expenses, and are projected using a range of scenarios and assumptions in an unbiased way
based on the HSBC Continental Europe's demographic and operating experience along with external mortality data where the HSBC
Continental Europe’s own experience data is not sufficiently large in size to be credible.
Adjustment for the time value of money and financial risks associated with the future cash flows
The estimates of future cash flows are adjusted to reflect the time value of money (i.e. discounting) and the financial risks to derive an
expected present value. The HSBC Continental Europe generally makes use of stochastic modelling techniques in the estimation for products
with options and guarantees. A bottom-up approach is used to determine the discount rate to be applied to a given set of expected future cash
flows. This is derived as the sum of the risk-free yield and an illiquidity premium. The risk-free yield is determined based on observable market
data, where such markets are considered to be deep, liquid and transparent. When information is not available, management judgement is
applied to determine the appropriate risk-free yield. Illiquidity premiums reflect the liquidity characteristics of the associated insurance
contracts.
Risk adjustment for non-financial risk
The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arises
from non-financial risk.
The HSBC Continental Europe does not disaggregate changes in the risk adjustment between insurance service result (comprising insurance
revenue and insurance service expense) and insurance finance income or expenses. All changes are included in the insurance service result.
Measurement models
The variable fee approach (‘VFA’) measurement model is used for most of the contracts issued by the HSBC Continental Europe, which is
mandatory upon meeting the following eligibility criteria at inception:
– the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
– the HSBC Continental Europe expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The HSBC
Continental Europe considers that a substantial share is a majority of returns; and

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– the HSBC Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair
value of the underlying items. The HSBC Continental Europe considers that a substantial proportion is a majority proportion of change on a
present value probability weighted average of all scenarios.
For contracts measured under VFA, the other comprehensive income (‘OCI’) option is used. The OCI option is applied where the underlying
items held by the HSBC Continental Europe are not accounted for at fair value through profit or loss. Under this option, only the amount that
matches income or expenses recognised in profit or loss on underlying items is included in finance income or expenses for these insurance
contracts, and hence results in the elimination of accounting mismatches. The remaining amount of finance income or expenses for these
insurance contracts issued for the period is recognised in OCI. In addition, the risk mitigation option is used for a number of economic offsets
against the instruments that meet specific requirements.
The remaining contracts issued and the reinsurance contracts held are accounted for under the general measurement model (‘GMM’).
CSM and coverage units
The CSM represents the unearned profit and results in no income or expense at initial recognition when the g roup of contracts is profitable. The
CSM is adjusted at each subsequent reporting period for changes in fulfilment cash flows relating to future service (e.g. changes in non-
economic assumptions, including mortality and morbidity rates). For initial recognition of onerous groups of contracts and when groups of
contracts become onerous subsequently, losses are recognised in insurance service expense immediately.
For groups of contracts measured using the VFA, changes in the HSBC Continental Europe’s share of the underlying items, and economic
experience and economic assumption changes adjust the CSM. However, under the risk mitigation option for VFA contracts, the changes in the
fulfilment cash flows and the changes in the HSBC Continental Europe’s share in the fair value return on underlying items that the instruments
mitigate are not adjusted in CSM but recognised in profit or loss. The risk mitigating instruments are primarily reinsurance contracts held.
For groups of contracts using the GMM, changes in economic experience and economic assumption do not adjust the CSM, but are recognised
in profit or loss as they arise.
The CSM is systematically recognised in insurance revenue to reflect the insurance contract services provided, based on the coverage units of
the g roup of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.
The HSBC Continental Europe identifies the quantity of the benefits provided as follows:
– Insurance coverage: this is based on the expected net policyholder insurance benefit at each period after allowance for decrements, where net
policyholder insurance benefit refers to the amount of sum assured less the fund value or surrender value.
– Investment services (including both investment-return service and investment-related service): this is based on a constant measure basis which
reflects the provision of access for the policyholder to the facility, the coverage unit being the number of insurance contracts.
For contracts that provide both insurance coverage and investment services, coverage units are weighted according to the expected present
value of the future cash outflows for each service.
(l)Employee compensation and benefits
Share-based payments
HSBC Continental Europe enters into equity-settled share-based payment arrangements with its employees as compensation for the provision
of their services.
The vesting period for these schemes may commence before the legal grant date if the employees have started to render services in respect
of the award before the legal grant date, where there is a shared understanding of the terms and conditions of the arrangement. Expenses are
recognised when the employee starts to render service to which the award relates.
Cancellations result from the failure to meet a non-vesting condition during the vesting period, and are treated as an acceleration of vesting
recognised immediately in the income statement. Failure to meet a vesting condition by the employee is not treated as a cancellation, and the
amount of expense recognised for the award is adjusted to reflect the number of awards expected to vest.
Post-employment benefit plans
HSBC Continental Europe operates a number of pension schemes including defined benefit, defined contribution and other post-employment
benefit schemes.
Payments to defined contribution schemes are charged as an expense as the employees render service.
Defined benefit pension obligations are calculated using the projected unit credit method. The net charge to the income statement mainly
comprises the service cost and the net interest on the net defined benefit asset or liability, and is presented in operating expenses.
Remeasurements of the net defined benefit asset or liability, which comprise actuarial gains and losses, return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The net
defined benefit asset or liability represents the present value of defined benefit obligations reduced by the fair value of plan assets, after
applying the asset ceiling test, where the net defined benefit surplus is limited to the present value of available refunds and reductions in future
contributions to the plan.
The costs of obligations arising from other post-employment plans are accounted for on the same basis as defined benefit pension plans.

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(m)Tax
Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to
items recognised in other comprehensive income or directly in equity, in which case the tax is recognised in the same statement in which the
related item appears.
Current tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous
years. The HSBC Group provides for potential current tax liabilities that may arise on the basis of the amounts expected to be paid to the tax
authorities.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet, and the
amounts attributed to such assets and liabilities for tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods
as the assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, HSBC Continental Europe consider the availability of evidence to support the
recognition of deferred tax assets, taking into account the inherent risks in long-term forecasting, including climate change-related, and drivers
of recent history of tax losses where applicable. HSBC Continental Europe also consider the future reversal of existing taxable temporary
differences and tax planning strategies, including corporate reorganisations.HSBC Continental Europe has applied the exception available under
IAS 12 to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.
Current and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.
Critical estimates and judgements
The recognition of deferred tax assets depends on judgements and estimates.

JUDGEMENTS – Assessing the probability and sufficiency of future taxable profits, considering the availability of evidence to support the recognition of deferred tax assets taking into account the inherent risk in long term forecasting and drivers of recent history of tax losses where applicable taking into account the future reversal of existing taxable temporary differences and tax planning strategies including corporate reorganisations. Specific judgements supporting deferred tax assets are described in Note 8. | ESTIMATES – The recognition of deferred tax assets is sensitive to estimates of future cash flows projected for periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of cash flows thereafter, on which forecasts of future taxable profit are based, and which affect the expected recovery periods and the pattern of utilisation of tax losses and tax credits.

(n)Provisions, contingent liabilities and guarantees
Provisions
Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive
obligation that has arisen as a result of past events and for which a reliable estimate can be made.
Critical estimates and judgements
The recognition and measurement of provisions requires the HSBC Continental Europe to make a number of judgements, assumptions and
estimates. The most significant are set out below:

JUDGEMENTS – Determining whether a present obligation exists. Professional advice is taken on the assessment of litigation and similar obligations. – Provisions for legal proceedings and regulatory matters typically require a higher degree of judgement than other types of provisions. When matters are at an early stage, accounting judgements can be difficult because of the high degree of uncertainty associated with determining whether a present obligation exists, and estimating the probability and amount of any outflows that may arise. As matters progress, management and legal advisers evaluate on an ongoing basis whether provisions should be recognised, revising previous estimates as appropriate. At more advanced stages, it is typically easier to make estimates around a better defined set of possible outcomes. | ESTIMATES – Provisions for legal proceedings and regulatory matters remain very sensitive to the assumptions used in the estimate. There could be a wider range of possible outcomes for any pending legal proceedings, investigations or inquiries. As a result, it is often not practicable to quantify a range of possible outcomes for individual matters. It is also not practicable to meaningfully quantify ranges of potential outcomes in aggregate for these types of provisions because of the diverse nature and circumstances of such matters and the wide range of uncertainties involved.

Contingent liabilities, contractual commitments and guarantees
Contingent liabilities
Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to
legal proceedings or regulatory matters, are not recognised in the financial statements but are disclosed unless the probability of settlement is
remote.
Financial guarantee contracts
Liabilities under financial guarantee contracts that are not classified as insurance contracts are recorded initially at their fair value, which is
generally the fee received or present value of the fee receivable.Subsequently, they are measured at the higher of the amount determined in
accordance with IFRS 9 for ECL and the amount initially recognised less, where appropriate, any cumulative income recognised in accordance
with IFRS 15.
(o)Non-current assets and disposal groups held for sale and discontinued operations
HSBC Continental Europe classifies non-current assets or disposal groups (including assets and liabilities) as held for sale when their carrying
amounts will be recovered principally through sale rather than through continuing use. To be classified as held for sale, the non-current asset or
disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such
assets or disposal groups, and the sale must be highly probable. For a sale to be highly probable, the appropriate level of management must be

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committed to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan must have been
initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value.
In addition, the sale should be expected to qualify as a completed sale within one year from the date of classification and actions required to
complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Held-for-sale assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell except for those
assets and liabilities that are not within the scope of the measurement requirements of IFRS 5. If the carrying amount of the non-current asset
(or disposal group) is greater than the fair value less costs to sell, an impairment loss for any initial or subsequent write down of the asset or
disposal group to fair value less costs to sell is recognised. Any such impairment loss is first allocated against the non-current assets that are in
scope of IFRS 5 for measurement. This first reduces the carrying amount of any goodwill allocated to the disposal group and then to the other
non-current assets of the disposal group pro rata on the basis of the carrying amount of each asset in the disposal group. Thereafter, any
impairment loss in excess of the carrying amount of the non-current assets in scope of IFRS 5 for measurement is recognised against the total
assets of the disposal group.
HSBC Continental Europe classifies a component of an entity as discontinued operation when it either has been disposed of or is classified as
held for sale and :
– represents a separate major line of business or geographical area of operations;
– is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
– is a subsidiary acquired exclusively with a view to resale.
After operations have been classified as discontinued, results will be reported as such in the income statement and cash flow statement.
Discontinued operations held for sale are measured in the same way as other disposal groups, that is, at the lower of carrying amount and fair
value less costs to sell.
Critical estimates and judgements
The classification as held for sale depends on certain judgements.

JUDGEMENTS Management judgement is required in determining whether the IFRS 5 held for sale criteria including whether a sale is highly probable and expected to complete within one year of classification. The exercise of judgement will normally consider the likelihood of successfully securing any necessary regulatory or political approvals which are almost always required for sales of banking businesses. For large and complex plans judgment will also include an assessment of the enforceability of any binding sale agreement, the nature and magnitude of any disincentives for non-performance, and the ability of the counterparty to undertake necessary pre-completion preparatory work, comply with conditions precedent, and otherwise be able to comply with contractual undertakings to achieve completion within the expected timescale. Once classified as held for sale, judgement is required to be applied on a continuous basis to ensure that classification remains appropriate in future accounting periods.

1.3 Significant events during the year
Business disposals
For details on business disposals refer to Note 2 ‘Assets held for sale, liabilities of disposal groups held for sale and discontinued operations’.
For related accounting policies and judgements refer to Note 1.2 (o).
Retained portfolio of home and certain other loans in France
Following the sale of our French retail banking operations on 1 January 2024, HSBC Continental Europe retained a portfolio of home and certain
other loans, with a carrying value of EUR 7.1 billion at the time of sale. On 31 October 2025, HSBC Continental Europe completed the sale of its
retained portfolio to a consortium comprising Rothesay Life plc and CCF. Prior to their derecognition at completion, as at 30 September 2025,
related balances stood at EUR 5 billion in loans. The completion of the transaction resulted in the recycling of cumulative fair value losses of
EUR 1.3 billion to the income statement that were previously recognised through other comprehensive income. For the year ended 31
December 2025, we additionally recognised a EUR 0.1 billion mark-to-market gain in ‘net income from financial instruments held for trading or
managed on a fair value basis arising on certain non-qualifying economic hedges that were used to hedge interest rate risk on the portfolio.
These non-qualifying economic hedges were derecognised following completion of the transaction.
French life insurance business
On 31 October 2025, HSBC Continental Europe completed the sale of its French life insurance business, HSBC Assurances Vie (France), to
Matmut Société d’Assurance Mutuelle. Prior to their derecognition at completion, as at 30 September 2025, related balances stood at EUR 24.1
billion in assets and EUR 23.2 billion in liabilities. For the year ended 31 December 2025, we recognised a EUR 0.1 billion pre-tax loss inclusive
of migration costs and the recycling of related reserves.
Private banking business in Germany
On 3 October 2025, HSBC Continental Europe completed the sale of its private banking business in Germany to BNP Paribas at which point we
recognised a pre-tax gain on disposal of EUR 0.1 billion. Prior to their derecognition at completion, as at 30 September 2025, related balances
stood at EUR 1.3 billion in assets and EUR 1.3 billion in liabilities.
Business in Malta
On 16 September 2025, HSBC Continental Europe signed a put option agreement with CrediaBank S.A. regarding the potential sale of its
majority shareholding of 70.03% in HSBC Bank Malta plc. On 22 December 2025, pursuant to the terms of the put option agreement and
following completion of HSBC Continental Europe's employee information and consultation process in France, a Sale and Purchase Agreement
for the transaction was signed. The transaction, which remains subject to regulatory approvals, did not meet the criteria for held for sale in the
fourth quarter of 2025, given completion is now expected in the first half of 2027. The sale is expected to generate an estimated pre-tax loss of
EUR 0.3 billion, inclusive of migration costs, which we expect to recognise largely in the first half of 2026 upon classification of the disposal
group as held for sale.

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Fund administration business in Germany
On 11 July 2025, HSBC Continental Europe reached an agreement to sell its fund administration business, Internationale
Kapitalanlagegesellschaft mbH, to BlackFin Capital Partners S.A.S. The disposal group met the held for sale criteria in the third quarter of 2025,
with immaterial balances remaining classified as held for sale at 31 December 2025. This transaction, which remains subject to reg ulatory
approval, is expected to complete in the second half of 2026, at which point an immaterial gain on disposal will be recognised.
Custody business in Germany
On 27 June 2025, HSBC Continental Europe reached an agreement to sell its custody business in Germany to BNP Paribas. This transaction is
anticipated to be completed in a phased manner, starting in the first quarter of 2026. While client consent and related operational requirements
may extend the timing for completion of all client transfers, given the signing of a sale and purchase agreement, the disposal group met the
held for sale criteria in the second quarter of 2025, with balances remaining classified as held for sale at 31 December 2025 of EUR 0.3 billion in
assets and EUR 10.6 billion in liabilities. The sale is expected to generate an estimated pre-tax gain on disposal of EUR 0.1 billion, which will be
recognised in line with completion of client transfers.
Issuances and repayments
In February 2025, HSBC Continental Europe redeemed perpetual floating rate notes previously recognised as Tier 2 Capital with a total
outstanding amount of EUR 16 million.
In May 2025, HSBC Continental Europe redeemed a Tier 2 loan at the first call date five years before maturity for EUR 500 million and issued a
new Tier 2 loan to HSBC Bank plc with maturity of eleven years for a notional amount of EUR 500 million.
In May 2025, HSBC Continental Europe redeemed a Tier 2 promissory note loan (Schuldscheindarlehen), which was issued by the Germany
branch of EUR 10 million, maturing in June 2028.
In June 2025, HSBC Continental Europe redeemed two further Tier 2 promissory note loans (Schuldscheindarlehen), both issued by the
Germany branch of EUR 10 million and EUR 5 million respectively, both maturing in July 2025.
In December 2025, HSBC Continental Europe redeemed Senior Non Preferred Debt of EUR 500 million without replacement.
In December 2025, HSBC Continental Europe called Additional Tier 1 instruments of EUR 200 million, issued by the Germany branch, with
redemption date 2 January 2026. A fter the call in December 2025, this instrument was de-recognised from equity and recognised as liability.
Irrevocable Payment Commitments of Single Resolution Fund
HSBC Continental Europe has reviewed the accounting treatment for the Irrevocable Payment Commitment ('IPC') after the confirmation of the
European Union Court of Justice adverse decision against BNPPB Public Sector and concluded that this decision does not impact the financial
statements. The cash deposit continues to be presented as an asset, and the associated IPC continues to be disclosed. A provision will be
recognized when an event likely to trigger a call for funds by the Single Resolution Board (through a bank resolution or a license withdrawal) and
will impact the amount is expected to occur. At 31 December 2025, the cash asset and the IPC amounted to EUR 150 million, including a EUR
10 million provision related to HSBC Germany.
Recognition of restructuring provision
On 14 May 2025, following HSBC Group announcements, HSBC Continental Europe proposed developments for the bank that reflected the
acceleration of the implementation of HSBC’s strategy aimed at simplifying the organisation to make it more agile, bringing together
Commercial Banking activities and Global Banking and Markets activities. This project across 10 countries was subject to a consultation with
the European Works Council. Local consultations were also required in France (through a ‘Plan de Sauvegarde de l’Emploi‘ (Social Plan)
including a voluntary scheme) and in Germany before any implementation. The implementation of the reorganisation of HSBC Continental
Europe’s activities began in November 2025. During 2025, HSBC Continental Europe recognised EUR 292 million of restructuring costs relating
to these actions, primarily termination benefits.
Resegmentation
On 22 October 2024, HSBC Holdings plc announced that the HSBC Group would simplify its organisational structure to help accelerate delivery
against its strategic priorities. Effective 1 January 2025, the HSBC Group started to operate through four new businesses – Hong Kong, UK,
Corporate and Institutional Banking ('CIB'), International Wealth and Premier Banking ('IWPB').
HSBC Continental Europe comprises CIB and IWPB businesses in Europe and acts as a global connector, linking European clients to
opportunities across the HSBC global network, and global clients to opportunities in Europe. It deploys capital to support European clients, that
in turn drives business booked through the HSBC network.
Corporate and Institutional Banking, International Wealth and Premier Banking, as well as the Corporate Centre (comprising: certain legacy
assets and central stewardship costs) operating segment results are presented on this basis in Note 11 ‘Segmental analysis’ on page 228.

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2 Assets held for sale, liabilities of disposal groups held for sale and
discontinued operations

Held for sale at 31 December
| 2025 | 2024
| €m | €m
Held for sale at 31 December |  |
Disposal groups | 329 | 25,493
Impairment losses 1 | — | (19)
Non-current assets held for sale 2 | 48 | 3
Assets held for sale | 377 | 25,477
Liabilities of disposal groups held for sale | 10,648 | 24,718

1 This represents impairment losses in excess of the carrying amount on the non-current assets, excluded from the measurement scope of IFRS 5.
2 At 31 December 2025 this includes shares of sino AG, following the decision to divest the 24.9 per cent stake in a controlled manner with the aim of maximising
the value for HSBC shareholders.
Disposal groups
Custody business in Germany
On 27 June 2025, HSBC Continental Europe reached an agreement to sell its custody business in Germany to BNP Paribas. This transaction is
anticipated to be completed in a phased manner, starting in the first quarter of 2026. While client consent and related operational requirements
may extend the timing for completion of all client transfers, given the signing of a sale and purchase agreement, the disposal group met the
held for sale criteria in the second quarter of 2025, with balances remaining classified as held for sale at 31 December 2025 of EUR 0.3 billion in
assets and EUR 10.6 billion in liabilities. The sale is expected to generate an estimated pre-tax gain on disposal of EUR 0.1 billion, which will be
recognised in line with completion of client transfers.
Fund administration business in Germany
On 11 July 2025, HSBC Continental Europe reached an agreement to sell its fund administration business, Internationale
Kapitalanlagegesellschaft mbH, to BlackFin Capital Partners S.A.S. The disposal group met the held for sale criteria in the third quarter of 2025,
with immaterial balances remaining classified as held for sale at 31 December 2025. This transaction, which remains subject to reg ulatory
approval, is expected to complete in the second half of 2026, at which point an immaterial gain on disposal will be recognised.
At 31 December 2025, the major classes of assets and associated liabilities of disposal groups held for sale, including allocated impairment
losses, were as follows:

| Custody business in Germany 1 | Fund administration business in Germany | Total
| €m | €m | €m
Assets of disposal group held for sale |  |  |
Loans and advances to banks | 13 | — | 13
Loans and advances to customers | 276 | 18 | 294
Prepayments, accrued income and other assets | 14 | 8 | 22
Total assets at 31 Dec 2025 | 303 | 26 | 329
Liabilities of disposal group held for sale |  |  |
Deposits by banks | 99 | — | 99
Customer accounts | 10,504 | 2 | 10,506
Accruals, deferred income and other liabilities | 28 | 15 | 43
Total liabilities at 31 Dec 2025 | 10,631 | 17 | 10,648
Fair value of selected financial instruments which are not carried at fair value on balance sheet |  |  |
Loan and advances to customers | 276 | 18 | 294
Customers accounts | 10,504 | 2 | 10,506
Expected date of completion | Second half of 2027 | Second half of 2026 |
Operating segment | CIB | CIB |

1 Under the financial terms of the sale of our German custody business, HSBC Continental Europe will transfer a nil net asset value for each client transferred, by
way of inclusion of additional cash.
Discontinued operations
Along with the above classification to held for sale, at the HSBC Continental Europe level, the sale of the life insurance business in France also
met the criteria of discontinued operations classification and presentation under IFRS 5. Accordingly, the loss of the discontinued operations
amounting to EUR 25 million (2024: profit of EUR 79 million) has been reported separately in the income statement.
Along with the above classification to held for sale, at the HSBC Continental Europe level, the retained portfolio of home and certain other loans
in France also met the criteria of discontinued operations classification and presentation under IFRS 5. Accordingly, the loss of the discontinued
operations amounting to EUR 1.3 billion (2024: EUR 0.2 billion) has been reported separately in the income statement.

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Notes on the consolidated financial statements

Discontinued operations income statement
| 2025 | 2024 1
| €m | €m
Net operating income | (1,303) | (80)
Total operating expenses | (23) | (28)
Profit/(loss) before tax | (1,326) | (108)
Tax expense | 21 | (21)
Profit/(loss) for the year | (1,305) | (129)
– non-controlling interests | — | —

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
Other comprehensive income relating to discontinued operations is as follows:

| 2025 | 2024 1
| €m | €m
Profit/(loss) for the period in respect of discontinued operations | (1,305) | (129)
Items that will not be reclassified subsequently to profit or loss: |  |
Debt instruments at fair value though other comprehensive income | 618 | 138
Finance income/(expenses) from insurance contracts | (580) | (129)
Exchange differences and other | (10) | 2
Remeasurement of defined benefit asset/liability | — | —
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk | — | —
Other comprehensive income/(expense) for the period, net of tax in respect of discontinued operations 2 | 28 | 11
Total comprehensive income/(expense) for the period in respect of discontinued operations | (1,277) | (118)

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Following the completion of the sale as on 31 October 2025, the cumulative losses recognised in other comprehensive income in respect of discontinued
operations amounting to EUR 40 million related to the life insurance business in France and EUR 1.3 billion related to the retained portfolio of home and certain
other loans in France were reclassified to the Income statement (2024: EUR 34 million related to the life insurance business in France)
The cash flows attributed to the discontinued operations are as follows:

| 2025 | 2024 1
| €m | €m
Cash and cash equivalents at beginning of the period | 336 | 9,837
Net cash from operating activities | (336) | 30
Net cash from investing activities | — | (9,531)
Net cash from financing activities | — | —
Net cash from discontinued operations | (336) | (9,501)
– cash and cash equivalents from discontinued operations | — | 336

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

3 Net fee income

Net fee income by product type (continuing operations)
| 2025 | 2024 1
| €m | €m
Funds under management | 429 | 378
Credit facilities | 260 | 254
Broking income | 212 | 236
Account services | 144 | 161
Underwriting | 144 | 173
Remittances | 120 | 95
Global custody | 108 | 96
Cards | 16 | 16
Imports/exports | 12 | 14
Insurance agency commission | 6 | 6
Unit trusts | — | 1
Other 2 | 394 | 325
Fee income | 1,845 | 1,755
Less: fee expense | (665) | (541)
Net fee income | 1,180 | 1,214

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Other includes intercompany fees and third party fees not included in other categories.

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Notes on the consolidated financial statements

Net fee income by global business (continuing operations)
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
At 31 Dec 2025 |  |  |  |
Fee income | 1,672 | 341 | (168) | 1,845
Less: fee expense | (736) | (97) | 168 | (665)
Net fee income | 936 | 244 | — | 1,180
At 31 Dec 2024 1,2 |  |  |  |
Fee income | 1,615 | 361 | (221) | 1,755
Less: fee expense | (650) | (105) | 214 | (541)
Net fee income | 965 | 256 | (7) | 1,214

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.
Net fee income includes EUR 528 million in fees earned on financial assets that are not at fair value through profit or loss (other than amounts
included in determining the effective interest rate) (2024: EUR 540 million), EUR 172 million in fees payable on financial liabilities that are not at
fair value through profit of loss (other than amounts included in determining the effective interest rate) (2024: EUR 146 million), EUR 537 million
in fees earned on trust and other fiduciary activities (2024: EUR 474 million) and EUR 22 million in fees payable relating to unit trust and other
fiduciary activities (2024: EUR 22 million).

4 Net income/(expense) from financial instruments measured at fair value
through profit or loss (continuing operations)

| 2025 | 2024 1
| €m | €m
Net income/(expense) arising on: |  |
Net trading activities | 1,099 | 708
Other instruments designated and mandatorily measured at fair value and related derivatives | (281) | (224)
Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 818 | 484
Financial assets held to meet liabilities under insurance and investment contracts | 39 | 40
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 39 | 40
Derivatives managed in conjunction with HSBC Continental Europe’s issued debt securities | 32 | 92
Other changes in fair value | (30) | (89)
Changes in fair value of designated debt and related derivatives | 2 | 3
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 35 | 63
Year ended 31 Dec | 894 | 590

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

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Notes on the consolidated financial statements

5 Insurance business
On 20 December 2024, HSBC Continental Europe signed a Memorandum of Understanding for the sale of its French life insurance business,
HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle. The Share Sale Agreement for the transaction was signed on
21 March 2025 following completion of all relevant works council information and consultation processes. The transaction completed on
31 October 2025.

Balance sheet of insurance manufacturing subsidiaries by type of contract
(Audited)
| Life Direct Participating and investment DPF contracts 1 | Life other 2 | Other contracts 3 | Shareholder assets and liabilities | Total
| €m | €m | €m | €m | €m
Financial assets | 494 | 32 | 166 | 72 | 764
– trading assets | — | — | — | — | —
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 484 | 30 | 164 | 43 | 721
– derivatives | — | — | — | — | —
– financial investments – at amortised cost | — | — | — | 1 | 1
– financial investments at fair value through other comprehensive income | — | — | — | — | —
– other financial assets 4 | 10 | 2 | 2 | 28 | 42
Insurance contract assets | — | — | — | — | —
Reinsurance contract assets | — | 4 | — | — | 4
Other assets and investment properties | 2 | 1 | — | 1 | 4
Total assets at 31 Dec 2025 | 496 | 37 | 166 | 73 | 772
Liabilities under investment contracts designated at fair value | — | — | 166 | — | 166
Insurance contract liabilities | 483 | 48 | — | — | 531
Reinsurance contract liabilities | — | 4 | — | — | 4
Deferred tax | — | — | — | — | —
Other liabilities | — | — | — | 9 | 9
Total liabilities at 31 Dec 2025 | 483 | 52 | 166 | 9 | 710
Total equity at 31 Dec 2025 | — | — | — | 62 | 62
Total liabilities and equity at 31 Dec 2025 | 483 | 52 | 166 | 71 | 772

Financial assets | 1,167 | 39 | 105 | 106 | 1,417
– trading assets | — | — | — | — | —
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 531 | 39 | 105 | 41 | 716
– derivatives | 5 | — | — | — | 5
– financial investments – at amortised cost | — | — | — | 1 | 1
– financial investments at fair value through other comprehensive income | — | — | — | — | —
– other financial assets 4 | 631 | — | — | 64 | 695
Insurance contract assets | — | — | — | — | —
Reinsurance contract assets | — | 3 | — | — | 3
Assets held for sale 5 | 22,030 | — | — | 1,318 | 23,348
Other assets and investment properties | 11 | 1 | — | 32 | 44
Total assets at 31 Dec 2024 | 23,208 | 43 | 105 | 1,456 | 24,812
Liabilities under investment contracts designated at fair value | — | — | 167 | — | 167
Insurance contract liabilities | 464 | 53 | — | — | 517
Reinsurance contract liabilities | — | — | — | — | —
Deferred tax | — | — | — | — | —
Liabilities of disposal groups held for sale 5 | 20,985 | 38 | — | 1,550 | 22,573
Other liabilities | — | — | — | 535 | 535
Total liabilities at 31 Dec 2024 | 21,449 | 91 | 167 | 2,085 | 23,792
Total equity at 31 Dec 2024 | — | — | — | 1,020 | 1,020
Total liabilities and equity at 31 Dec 2024 | 21,449 | 91 | 167 | 3,105 | 24,812

1‘Life direct participating and investment DPF’ contracts are substantially measured under the variable fee approach measurement model.
2‘Life other’ contracts are measured under the general measurement model and mainly includes protection insurance contracts as well as reinsurance contracts.
The reinsurance contracts primarily provide diversification benefits over the life direct participating and investment discretionary participation feature (’DPF’)
contracts.
3‘Other contracts’ includes investment contracts for which HSBC does not bear significant insurance risk.
4'Other financial assets' comprise mainly loans and advances to banks, cash and intercompany balances with other non-insurance legal entities.
5 Includes EUR 23.3 billion of assets and EUR 22.6 billion of liabilities, related to planned sale of the life insurance business in France classified as held for sale in
2024.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
216

Notes on the consolidated financial statements

Movements in carrying amounts of insurance contracts - Analysis by remaining coverage and incurred claims
| Year ended 31 Dec 2025
| Life direct participating and Investment DPF | Other life contracts |
| Liabilities for remaining coverage: |  |  | Liabilities for remaining coverage: |  |  |
| Excluding loss component | Loss component | Incurred claims | Total | Excluding loss component | Loss component | Incurred claims | Total | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | — | — | — | —
Opening liabilities | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518
Net opening balance 1 Jan 2025 | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518
Changes in the statement of profit or loss and OCI |  |  |  | — |  |  |  | — | —
Insurance revenue |  |  |  | — |  |  |  | — | —
Contract under fair value approach | (6) | — | — | (6) | (10) | — | — | (10) | (16)
Contracts under the modified retrospective approach | — | — | — | — | — | — | — | — | —
Other contracts 1 | (2) | — | — | (2) | (3) | — | — | (3) | (5)
Total insurance revenue | (8) | — | — | (8) | (13) | — | — | (13) | (21)
Insurance service expenses |  |  |  | — |  |  |  | — | —
Incurred claims and other insurance service expenses | — | — | 8 | 8 | — | — | 1 | 1 | 9
Amortisation of insurance acquisition cash flows | — | — | — | — | 1 | — | — | 1 | 1
Losses and reversal of losses on onerous contracts | — | — | — | — | — | — | — | — | —
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | — | — | —
Total insurance service expenses | — | — | 8 | 8 | 1 | — | 1 | 2 | 10
Investment components | (54) | — | 54 | — | (1) | — | 1 | — | —
Insurance service result | (62) | — | 62 | — | (13) | — | 2 | (11) | (11)
Net finance expenses from insurance contracts | 38 | — | — | 38 | (4) | — | — | (4) | 34
Other movements recognised in the statement of profit or loss and OCI | — | — | — | — | — | — | — | — | —
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | (24) | — | 62 | 38 | (17) | — | 2 | (15) | 23
Cash flows |  |  |  | — |  |  |  | — | —
Premiums received | 43 | — | — | 43 | 14 | — | — | 14 | 57
Claims and other insurance service expenses paid | (1) | — | (62) | (63) | — | — | (3) | (3) | (66)
Insurance acquisition cash flows | — | — | — | — | (1) | — | — | (1) | (1)
Total cash flows | 42 | — | (62) | (20) | 13 | — | (3) | 10 | (10)
Other movements | — | — | — | — | — | — | — | — | —
Net closing balance 31 Dec 2025 | 480 | — | 3 | 483 | 47 | — | 1 | 48 | 531
Closing assets | — | — | — | — | — | — | — | — | —
Closing liabilities | 480 | — | 3 | 483 | 47 | — | 1 | 48 | 531
Net closing balance 31 Dec 2025 | 480 | — | 3 | 483 | 47 | — | 1 | 48 | 531

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
217

Notes on the consolidated financial statements

Movements in carrying amounts of insurance contracts – Analysis by remaining coverage and incurred claims (continued)
| Year ended 31 Dec 2024
| Life direct participating and Investment DPF | Other life contracts |
| Liabilities for remaining coverage: |  |  | Liabilities for remaining coverage: |  |  |
| Excluding loss component | Loss component | Incurred claims | Total | Excluding loss component | Loss component | Incurred claims | Total | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | — | — | — | —
Opening liabilities | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035
Net opening balance 1 Jan 2024 | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |
Insurance revenue |  |  |  |  |  |  |  |  |
Contract under fair value approach | (11) | — | — | (11) | (11) | — | — | (11) | (22)
Contracts under the modified retrospective approach | (131) | — | — | (131) | (16) | — | — | (16) | (147)
Other contracts 1 | (36) | — | — | (36) | (30) | — | — | (30) | (66)
Total insurance revenue | (178) | — | — | (178) | (57) | — | — | (57) | (235)
Insurance service expenses |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses | — | — | 81 | 81 | — | — | 37 | 37 | 118
Amortisation of insurance acquisition cash flows | 3 | — | — | 3 | 1 | — | — | 1 | 4
Losses and reversal of losses on onerous contracts | — | (1) | — | (1) | — | — | — | — | (1)
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | (7) | (7) | (7)
Total insurance service expenses | 3 | (1) | 81 | 83 | 1 | — | 30 | 31 | 114
Investment components | (1,976) | — | 1,976 | — | — | — | — | — | —
Insurance service result | (2,151) | (1) | 2,057 | (95) | (56) | — | 30 | (26) | (121)
Net finance expenses from insurance contracts | 1,049 | — | — | 1,049 | — | — | — | — | 1,049
Other movements recognised in the statement of profit or loss and OCI | — | — | — | — | — | — | — | — | —
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | (1,102) | (1) | 2,057 | 954 | (56) | — | 30 | (26) | 928
Cash flows |  |  |  |  |  |  |  |  |
Premiums received | 1,683 | — | — | 1,683 | 60 | — | — | 60 | 1,743
Claims and other insurance service expenses paid | (58) | — | (2,054) | (2,112) | — | — | (32) | (32) | (2,144)
Insurance acquisition cash flows | (15) | — | — | (15) | (2) | — | — | (2) | (17)
Total cash flows | 1,610 | — | (2,054) | (444) | 58 | — | (32) | 26 | (418)
Liabilities of disposal groups held for sale | (20,985) | — | — | (20,985) | (9) | (2) | (27) | (38) | (21,023)
Other movements | — | (1) | (1) | (2) | 1 | (1) | (2) | (2) | (4)
Net closing balance 31 Dec 2024 | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518
Closing assets | — | — | — | — | — | — | — | — | —
Closing liabilities | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518
Net closing balance 31 Dec 2024 | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518

1 Other contracts are those contracts measured by applying IFRS 17 from inception of the contracts. This includes contracts measured under the full retrospective
approach at Transition and contracts incepted after Transition.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
218

Notes on the consolidated financial statements

Movements in carrying amounts of insurance contracts - Analysis by measurement component |
| Insurance contracts – Life direct participating and investment discretionary participating contracts | Insurance contracts – Life Other contracts | Total
| 2025 | 2025
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment | Contracts under fair value approach | Contracts under modified retros- pective approach | Other contracts 1 | Total | Estimates of present value of future cash flows and risk adjustment | Contract under fair value approach | Contracts under modified retros- pective approach | Other contracts 1 | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | — | — | — | — | — | —
Opening liabilities | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518
Net opening balance 01 Jan 2025 | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |  |  |
Changes that relate to current services |  |  |  |  |  |  |  |  |  |  |
CSM recognised for services provided | — | (2) | — | (1) | (3) | — | (5) | — | (1) | (6) | (9)
Change in risk adjustment for non-financial risk for risk expired | — | — | — | — | — | — | — | — | — | — | —
Experience adjustments | 4 | — | — | — | 4 | (4) | — | — | — | (4) | —
Other movements recognised in insurance service result | — | — | — | — | — | — | — | — | — | — | —
Changes that relate to future services |  |  |  |  | — |  |  |  |  | — | —
Contracts initially recognised in the year | (1) | — | — | 1 | — | (2) | — | — | 2 | — | —
Changes in estimates that adjust the CSM | (10) | 7 | — | 2 | (1) | (3) | 2 | — | 1 | — | (1)
Changes in estimates that result in losses and reversal of losses on onerous contracts | — | — | — | — | — | — | — | — | — | — | —
Changes that relate to past services |  |  |  |  | — |  |  |  |  | — | —
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | — | — | — | — | —
Insurance service result | (7) | 5 | — | 2 | — | (9) | (3) | — | 2 | (10) | (10)
Net finance expenses from insurance contracts | 38 | — | — | — | 38 | (5) | — | — | — | (5) | 33
Other movements recognised in the statement of profit or loss and other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | 31 | 5 | — | 2 | 38 | (14) | (3) | — | 2 | (15) | 23
Cash flows |  |  |  |  | — |  |  |  |  | — | —
Premiums received | 43 | — | — | — | 43 | 14 | — | — | — | 14 | 57
Claims, other insurance service expenses paid (including investment components) and other cash flows | (63) | — | — | — | (63) | (3) | — | — | — | (3) | (66)
Insurance acquisition cash flows | — | — | — | — | — | (1) | — | — | — | (1) | (1)
Total cash flows | (20) | — | — | — | (20) | 10 | — | — | — | 10 | (10)
Other movements | — | — | — | — | — | — | — | — | — | — | —
Net closing balance 31 Dec 2025 | 464 | 12 | — | 7 | 483 | (6) | 42 | — | 12 | 48 | 531
Closing assets | — | — | — | — | — | — | — | — | — | — | —
Closing liabilities | 464 | 12 | — | 7 | 483 | (6) | 42 | — | 12 | 48 | 531
Net closing balance 31 Dec 2025 | 464 | 12 | — | 7 | 483 | (6) | 42 | — | 12 | 48 | 531

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
219

Notes on the consolidated financial statements

Movements in carrying amounts of insurance contracts - Analysis by measurement component (continued) |
| Insurance contracts – Life direct participating and investment discretionary participating contracts | Insurance contracts – Life Other contracts | Total
| 2024 | 2024
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment | Contracts under fair value approach | Contracts under modified retros- pective approach | Other contracts 1 | Total | Estimates of present value of future cash flows and risk adjustment | Contract under fair value approach | Contracts under modified retros- pective approach | Other contracts 1 | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | (1) | — | — | 1 | — | —
Opening liabilities | 20,080 | 10 | 645 | 207 | 20,942 | (1) | 48 | 16 | 30 | 93 | 21,035
Net opening balance 01 Jan 2024 | 20,080 | 10 | 645 | 207 | 20,942 | (2) | 48 | 16 | 31 | 93 | 21,035
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |  |  |
Changes that relate to current services |  |  |  |  |  |  |  |  |  |  |
CSM recognised for services provided | — | (8) | (55) | (16) | (79) | — | (5) | (5) | (9) | (19) | (98)
Change in risk adjustment for non-financial risk for risk expired | (10) | — | — | — | (10) | (2) | — | — | — | (2) | (12)
Experience adjustments | (5) | — | — | — | (5) | 2 | — | — | — | 2 | (3)
Other movements recognised in insurance service result | — | — | — | — | — | — | — | — | — | — | —
Changes that relate to future services |  |  |  |  |  |  |  |  |  |  |
Contracts initially recognised in the year | (37) | — | — | 37 | — | (10) | — | — | 10 | — | —
Changes in estimates that adjust the CSM | 26 | 9 | (5) | (30) | — | (3) | 2 | 7 | (6) | — | —
Changes in estimates that result in losses and reversal of losses on onerous contracts | (1) | — | — | — | (1) | — | — | — | — | — | (1)
Changes that relate to past services |  |  |  |  |  |  |  |  |  |  |
Adjustments to liabilities for incurred claims | — | — | — | — | — | (7) | — | — | — | (7) | (7)
Insurance service result | (27) | 1 | (60) | (9) | (95) | (20) | (3) | 2 | (5) | (26) | (121)
Net finance expenses from insurance contracts | 1,049 | — | — | — | 1,049 | — | — | — | — | — | 1,049
Other movements recognised in the statement of profit or loss and other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | 1,022 | 1 | (60) | (9) | 954 | (20) | (3) | 2 | (5) | (26) | 928
Cash flows |  |  |  |  |  |  |  |  |  |  |
Premiums received | 1,683 | — | — | — | 1,683 | 60 | — | — | — | 60 | 1,743
Claims, other insurance service expenses paid (including investment components) and other cash flows | (2,112) | — | — | — | (2,112) | (32) | — | — | — | (32) | (2,144)
Insurance acquisition cash flows | (15) | — | — | — | (15) | (2) | — | — | — | (2) | (17)
Total cash flows | (444) | — | — | — | (444) | 26 | — | — | — | 26 | (418)
Liabilities of disposal groups held for sale | (20,206) | — | (587) | (192) | (20,985) | (5) | — | (19) | (14) | (38) | (21,023)
Other movements | 1 | (4) | 2 | (1) | (2) | (1) | — | 1 | (2) | (2) | (4)
Net closing balance 31 Dec 2024 | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518
Closing assets | — | — | — | — | — | — | — | — | — | — | —
Closing liabilities | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518
Net closing balance 31 Dec 2024 | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518

1 Other contracts are those contracts measured by applying IFRS 17 from inception of the contracts. This includes contracts measured under the full retrospective
approach at Transition and contracts incepted after Transition.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
220

Notes on the consolidated financial statements

Discount rates
The Group has elected to apply a bottom-up approach whereby the discount rate is derived using the risk-free rate adjusted for an illiquidity
premium as set out in the Summary of material accounting policies (k) Insurance contracts on page 207. The blended average of discount rates
used within our most material manufacturing entities are as follows:

Malta |
| EUR
At 31 December 2025 |
rate 10Y (%) | 2.86
rate 20Y (%) | 3.21
At 31 December 2024 |
rate 10Y (%) | 2.27
rate 20Y (%) | 2.26

Amounts Payable on Demand
| At 31 Dec 2025 | At 31 Dec 2024 1
| Amounts Payable on Demand | Carrying Amount for these Contracts | Amounts Payable on Demand | Carrying Amount for these Contracts
| €m | €m | €m | €m
Life direct participating and investment DPF contracts | 259 | 483 | 252 | 465
Life other contracts | — | 48 | — | 53
Total | 259 | 531 | 252 | 518

1'Excludes the amounts of disposal group related to the planned sale of the life insurance business in France.

6 Employee compensation and benefits
Employee compensation and average number of employees

Employee compensation (continuing operations) |  |
| 2025 | 2024 1
| €m | €m
Wages and salaries | 1,106 | 780
Social security costs | 209 | 200
Post-employment benefits | 4 | 27
Year ended 31 Dec | 1,319 | 1,007

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

Average number of persons employed by HSBC Continental Europe during the year
| 2025 | 2024 1
International Wealth and Premier Banking | 1,367 | 1,399
Corporate and Institutional Banking | 3,184 | 3,284
Corporate Centre | 20 | 19
Support functions and others 2 | 2,572 | 2,842
Year ended 31 Dec 3 | 7,143 | 7,544

1 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.
2 Including pre-retirement (‘CFCS’) and expatriates.
3 Permanent contracts (‘CDI’) and fixed terms contracts (‘CDD’) within HSBC Continental Europe (including the European branches) and its subsidiaries.
Share-based payments
HSBC Group policy
Since 2006, the general policy of the HSBC Group is to award shares instead of share options (except in the case of a country specific legal and
tax regulation).
The shares can be:
– ‘Group Performance Shares’ subject to performance conditions, granted only to Group Executives; and
– Restricted Shares’ without performance conditions, awarded to other employees, part of whose variable compensation is paid in the form of
HSBC shares.
Practice at HSBC Continental Europe
HSBC Continental Europe's employees are not granted Group Performance Shares which are reserved for Group Executives.
Employees for whom part of the variable compensation is deferred pursuant to Group rules are granted restricted shares. The same is true for
employees identified as risk takers who are subject to special rules regarding variable compensation, 50 per cent of which must be paid in
shares for both the immediate and deferred portions.
For employees under French contracts, these shares take the form of “French qualified shares”, which benefit from a special social and tax
regime.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
221

Notes on the consolidated financial statements

Movement on 'Restricted Shares'
| Number
| (000s)
Outstanding at 1 Jan 2025 | 5,466
Granted during the year 1 | 2,300
Exercised during the year 2 | (2,689)
Movements of staff during the year 3 | (592)
Outstanding at 31 Dec 2025 | 4,485
– of which: exercisable | —
Weighted average remaining contractual life (years) | —
Outstanding at 1 Jan 2024 | 6,091
Granted during the year 1 | 3,921
Exercised during the year 2 | (3,432)
Movements of staff during the year 3 | (1,114)
Outstanding at 31 Dec 2024 | 5,466
– of which: exercisable | —
Weighted average remaining contractual life (years) | —

1 The weighted average price at grant date in 2025 was EUR 10.96 (2024: EUR 7.00).
2 The weighted average price at vesting date in 2025 was EUR 10.40 (2024: EUR 6.91).
3 Corresponds to the shares granted to Group employees who joined HSBC Continental Europe during the year net of shares granted to HSBC Continental Europe
employees who joined other Group entities, to the shares expired during the year and to the shares exercised during the year by employees no more present as
at 31 December 2025.
In 2025, EUR 9 million was charged to the income statement in respect of amortisation of the existing plans for HSBC in France (in 2024: EUR
9 million).
The vesting period for deferred share awards expected to be granted in 2025, in respect of the 2024 performance year, was determined to
have started on 1 January 2024.
Employee share offering
In 2025, HSBC Continental Europe did not issue shares reserved for employees.

Income statement charge (continuing operations)
| 2025 | 2024
| €m | €m
Restricted share awards | 26 | 22
Savings related and other share option plans | — | —
Year ended 31 Dec | 26 | 22

Pension and other post-retirement benefits
HSBC Continental Europe operates a number of pension and other post-retirement benefit plans. These plans include both defined benefit and
defined contribution plans of which the pension plan of the branch of HSBC Continental Europe in Germany is the most prominent.
HSBC Continental Europe pension plan in Germany
The pension plan of the branch of HSBC Continental Europe in Germany is a final salary scheme and is calculated based on the employee
length of service multiplied by a predefined benefit accrual and earnings. The pension is paid when the benefit falls due and is a specified
pension payment, lump-sum or combination thereof. The plan is overseen by an independent corporate trustee, who has a fiduciary
responsibility for the operation of the plan. Its assets are held separately from the assets of the HSBC Group.
The strategic aim of the investment is to achieve, as continuously as possible, an increase in value over time. For this purpose, the fund invests
mainly in government bonds, corporate bonds, investment funds and equities. It invests predominantly in developed regions. Overall, emphasis
is placed on having a high degree of diversification.
Plan assets were created to fund the pension obligations and separated through what is known as a contractual trust agreement ('CTA'). HSBC
Trinkaus Vermögenstreuhänder e. V. and HSBC Trinkaus Mitarbeitertreuhänder e. V. assume the role of trustee. Active members of the trustee
are Bank employees.
The Bank regularly aims to comprehensively finance the committed benefits externally. There is no obligation to allocate contributions to the
CTA. The Bank is entitled to assets that are not needed to fund the committed benefits. No further additions to the plan assets are envisaged at
the present time.
In accordance with the Memorandum and Articles of Association, the revenues may only be used, for example, for pension payments or for
reinvestment. Similarly, withdrawals may only be made in accordance with the Memorandum and Articles of Association.
The latest measurement of the defined benefit obligation of the plan at 31 December 2025 was carried out by Hans-Peter Kieselmann (Fellow
of the German Association of Actuaries ('DAV')) and Helga Bader, at Willis Towers Watson GmbH, using the projected unit credit method. The
next measurement will have an effective date of 31 December 2026.
HSBC Continental Europe pension plan in France
HSBC Continental Europe pays each retiree in France a retiring indemnity. The amount is determined by the final earnings, the length of service
in the company at this date and the guarantees under collective and internal agreements. Those plans represent 59 per cent of all
commitments in France.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
222

Notes on the consolidated financial statements

In addition, certain retired employees from the bank and HSBC Continental Europe Executive Directors are entitled to defined benefits pension
plan. These plans provide the payment of benefits from the date of retirement and represent roughly 36 per cent of all commitments in France.
The latest measurement of the defined benefit obligation of the plan at 31 December 2025 was carried out by SPAC Actuaries and the costs
recognised for funding these post-employment plans are determined using the p rojected unit credit method, with annual actuarial valuations
performed on each plan. The next measurement will have an effective date of 31 December 2026. Payments to defined contribution plans and
state-managed retirement benefit plans, where HSBC Continental Europe obligations under the plans are equivalent to a defined contribution
plan, are charged as an expense as they fall due.
Recognition of defined benefit plans

Net (assets)/liabilities recognised on the balance sheet in respect of defined benefit plans
| Fair value of plan assets | Present value of defined benefit obligations | Effect of limit on plan surpluses | Total
| €m | €m | €m | €m
Defined benefit pension plans | 393 | (346) | — | 47
Defined benefit healthcare plans | — | — | — | —
At 31 Dec 2025 | 393 | (346) | — | 47
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’) |  |  |  | (63)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’) |  |  |  | 111
Defined benefit pension plans | 399 | (407) | — | (8)
Defined benefit healthcare plans | — | — | — | —
At 31 Dec 2024 | 399 | (407) | — | (8)
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’) |  |  |  | (75)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’) |  |  |  | 66

Defined benefit pension plans

Net asset/(liability) under defined benefit pension plans
| Fair value of plan assets | Present value of defined benefit obligations | Net defined benefit asset/(liability)
| France & Other plans | Germany | France & Other plans | Germany | France & Other Plans | Germany
| €m | €m | €m | €m | €m | €m
At 1 Jan 2025 | 4 | 395 | (69) | (338) | (65) | 57
Service cost | — | — | 4 | 9 | 4 | 9
– current service cost | — | — | (2) | 8 | (2) | 8
– past service cost and gains/(losses) from settlements | — | — | 6 | 1 | 6 | 1
Net interest income/(cost) on the net defined benefit asset/(liability) | — | 11 | (2) | (11) | (2) | —
Re-measurement effects recognised in other comprehensive income | — | (1) | — | 25 | — | 24
– return on plan assets (excluding interest income) | — | (1) | — | — | — | (1)
– actuarial gains/(losses) | — | — | — | 25 | — | 25
– other changes | — | — | — | — | — | —
Benefits paid | — | — | 4 | 16 | 4 | 16
Other movements 1 | — | (16) | 2 | 14 | 2 | (2)
At 31 Dec 2025 | 4 | 389 | (61) | (285) | (57) | 104

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Net asset/(liability) under defined benefit pension plans (continued)
| Fair value of plan assets | Present value of defined benefit obligations | Net defined benefit asset/(liability)
| France & Other plans | Germany | France & Other plans | Germany | France & Other Plans | Germany
| €m | €m | €m | €m | €m | €m
At Jan 2024 | 5 | 388 | (71) | (350) | (66) | 38
Service cost | — | — | (3) | (6) | (3) | (6)
– current service cost | — | — | (3) | (6) | (3) | (6)
– past service cost and gains/(losses) from settlements | — | — | — | — | — | —
Net interest income/(cost) on the net defined benefit asset/(liability) | — | 8 | (2) | (10) | (2) | (2)
Re-measurement effects recognised in other comprehensive income | — | (1) | (2) | 8 | (2) | 7
– return on plan assets (excluding interest income) | — | (1) | — | — | — | (1)
– actuarial gains/(losses) | — | — | (2) | 8 | (2) | 8
– other changes | — | — | — | — | — | —
Benefits paid | (1) | — | 5 | 14 | 4 | 14
Other movements 2 | — | — | 4 | 6 | 4 | 6
At 31 Dec 2024 | 4 | 395 | (69) | (338) | (65) | 57

1 Other movements in Germany pension plans include EUR 16 million of the plan assets and EUR 14 million of the defined benefit obligations related to the
planned sale of the fund administration business in Germany reclassified to assets/liabilities of disposal group held for sale.
2 Other movements in Germany pension plans include EUR 10 million of the defined benefit obligations related to the planned sale of the private banking
business in Germany reclassified to liabilities of disposal group held for sale. Other movements in France and Other plans includes EUR 3 million of the defined
benefit obligations related to the planned sale of life insurance business in France reclassified to liabilities of disposal group held for sale.
The branch of HSBC Continental Europe in Germany does not expect to make contributions to the pension plan of the branch of HSBC
Continental Europe in Germany during 2026. Benefits expected to be paid from the plans to retirees over each of the next five years, and in
aggregate for the five years thereafter, are as follows:

Benefits expected to be paid from plans
| 2026 | 2027 | 2028 | 2029 | 2030 | 2031–2035
| €m | €m | €m | €m | €m | €m
France 1 | 8 | 4 | 4 | 4 | 4 | 20
Germany 2 | 17 | 14 | 14 | 15 | 16 | 85

1 The duration of the defined benefit obligation is 9 years for the principal plan under the disclosure assumptions adopted (2024: 9 years) and 9 years for all other
plans combined (2024: 9 years). The maturity of commitments remains at 11 years in 2025, as was the case in 2024.
2 The duration of the defined benefit obligation is 12.41 years for the pension plan of the branch of HSBC Continental Europe in Germany under the disclosure
assumptions adopted (2024: 13.6).

Fair value of plan assets by asset classes
| At 31 Dec 2025 | At 31 Dec 2024
| Fair value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC | Fair value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC
| €m | €m | €m | €m | €m | €m | €m | €m
France and Other plans |  |  |  |  |  |  |  |
Fair value of plan assets | 4 | 4 | — | — | 4 | 4 | — | —
– equities | — | — | — | — | — | — | — | —
– bonds fixed income | 3 | 3 | — | — | 4 | 4 | — | —
– bonds indexed linked | — | — | — | — | — | — | — | —
– other | 1 | 1 | — | — | — | — | — | —
Germany |  |  |  |  |  |  |  |
Fair value of plan assets | 389 | 379 | 10 | — | 395 | 379 | 16 | —
– equities | 3 | 3 | — | — | 3 | 3 | — | —
– bonds fixed income | 231 | 231 | — | — | 258 | 258 | — | —
– bonds indexed linked | 6 | 6 | — | — | 8 | 8 | — | —
– other | 149 | 139 | 10 | — | 126 | 110 | 16 | —

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Notes on the consolidated financial statements

Post-employment defined benefit plans’ principal actuarial assumptions
HSBC Continental Europe determines discount rates to be applied to its obligations in consultation with the plans' local actuaries, based upon
the current average yields of high quality (AA rated or equivalent) debt instruments, with maturities consistent with that of the defined benefit
obligations.

Key actuarial assumptions
| France | Germany
| Discount rate | Inflation rate | Rate of increase for pensions | Rate of pay increase | Discount rate | Inflation rate | Rate of increase for pensions | Rate of pay increase
| % | % | % | % | % | % | % | %
At 31 Dec 2025 | 3.50 | 2.00 | 2.00 | 2.85 | 4.12 | 2.10 | 2.10 | 2.10
At 31 Dec 2024 | 3.25 | 2.00 | 2.00 | 2.92 | 3.41 | 2.25 | 2.25 | 2.25

Mortality tables and average life expectancy at age 60
| Mortality table | Life expectancy at age 60 for a male member currently: | Life expectancy at age 60 for a female member currently:
France | Aged 60 | Aged 60
At 31 Dec 2025 | TV–TD 2019 2021 | 25.26 | 27.49
At 31 Dec 2024 | TV–TD 2018 2020 | 23.14 | 27.58
Mortality tables and average life expectancy at age 60
| Mortality table | Life expectancy at age 60 for a male member currently: | Life expectancy at age 60 for a female member currently:
Germany | Aged 60 | Aged 40 | Aged 60 | Aged 40
At 31 Dec 2025 | RT 2018 G 1 | 25.7 | 28.7 | 29.3 | 31.6
At 31 Dec 2024 | RT 2018 G 1 | 25.5 | 28.5 | 29.2 | 31.5

1 Heubeck tables – RT 2018G – are generally accepted and used mortality tables for occupational pension plans in Germany taking into account future mortality
improvements and lighter mortality for higher-paid pensioners.
Actuarial assumption sensitivities
The following table shows the effect of changes in actuarial assumptions on the principal plans. The discount rate is sensitive to changes in
market conditions arising during the reporting period. The mortality rates used are sensitive to experience from the plan member profile.

| France | Germany
| Financial impact of increase | Financial impact of decrease | Financial impact of increase | Financial impact of decrease
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
| €m | €m | €m | €m | €m | €m | €m | €m
Discount rate – increase/decrease of 0.25% | (1) | (2) | 1 | 2 | (8) | (9) | 8 | 10
Inflation rate – increase/decrease of 0.25% | 1 | 1 | (1) | (1) | 6 | 7 | (6) | (8)
Pension payments and deferred pensions – increase/decrease of 0.25% | 1 | 1 | (1) | (1) | 5 | 7 | (5) | (7)
Pay – increase/decrease of 0.25% | 1 | 1 | (1) | (1) | 1 | 1 | (1) | (1)
Change in mortality – increase of 1 year | 1 | 1 | N/A | N/A | 8 | 10 | N/A | N/A

7 Auditors’ remuneration

| PricewaterhouseCoopers Audit France 1 | BDO Paris 1
| Amount (excluding VAT) |  | Amount (excluding VAT) |
| €k | % | €k | %
Fees for account certifications | 4,241 | 83 | 777 | 88
Fees related to the Corporate and Sustainability Report Directive (‘CSRD’) | 680 | 13 | — | —
Fees for other services provided to HSBC Continental Europe | 208 | 4 | 104 | 12
Year ended 31 Dec 2025 | 5,129 | 100 | 881 | 100
Fees for account certifications | 3,984 | 79 | 652 | 87
Fees related to the Corporate and Sustainability Report Directive (‘CSRD’) | 580 | 12 | — | —
Fees for other services provided to HSBC Continental Europe | 471 | 9 | 95 | 13
Year ended 31 Dec 2024 | 5,035 | 100 | 747 | 100

1 This Note is prepared in compliance with ANC regulation 2016-08, 2016-09, 2016-10 and 2016-11 and includes only the fees paid to PricewaterhouseCoopers
Audit France and BDO Paris.
Account certifications as of 31 December 2025 for PricewaterhouseCoopers Audit France and BDO Paris mainly concern statutory audit, legal,
or regulatory services. Services other than the account certification concern assurance services (e.g.certification on internal control in
accordance to ISAE 3402).

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8 Tax

Tax expense (continuing operations)
| 2025 | 2024 1
| €m | €m
Current tax | 286 | 179
Deferred tax | (222) | 227
– current year deferred tax | (236) | 212
– adjustment in respect of prior years deferred tax | 3 | 15
– effect of change in tax rate on deferred tax | 11 | —
Year ended 31 Dec | 64 | 406

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
HSBC Continental Europe's profits are taxed at different rates depending on the country in which the profits arise. The key applicable corporate
income tax rate is France and for fiscal year 2025 the rate is 25 per cent. The social contribution on profit (CSB at 3.3 per cent of the corporate
income tax) is maintained and is added to the corporate income tax. Consequently, the applicable tax rate for fiscal year 2025 for French entities
is 25.83 per cent (2024: 25.83 per cent).
The final effective tax rate varies depending on the contribution from entities outside of France, notably Germany which has an income tax rate
for fiscal year 2025 of 31.4 per cent and other European branches. Enacted in the 2025 German Finance Act, the corporate income tax rate will
reduce by 1 per cent each year beginning in 2028 until 2032 resulting in a total reduction of 5 per cent.
Tax risks
Following a tax audit for the years 2015 to 2018, HSBC Leasing France ('HLF') and its SPVs have been reassessed on the tax treatment of
provisions related to aircraft leasing transactions. Since then HLF continued to dispute these reassessments but French Tax Authorities have
rejected the claims filed by HSBC. The actions brought in 2023 and 2024 by HSBC before the Administrative Court, for the years in question, is
still ongoing.
Analysis of overall tax charge

Reconciliation of tax charge (credit) (continuing operations)
| 2025 | 2024 1
| Continuing tax charges (credit) | Continuing tax charges (credit)
| €m | % | €m | %
Profit/(loss) before tax | 725 |  | 930 |
Tax expense |  |  |  |
Taxation at French corporate tax rate | 187 | 25.8 | 240 | 25.8
Impact of differently taxed overseas profits in overseas locations | (6) | (0.8) | 5 | 0.6
Items impacting tax charge: |  |  |  |
– Permanent disallowables | (16) | (2.2) | 2 | 0.2
– Local taxes and overseas withholding taxes | 12 | 1.7 | 4 | 0.4
– Changes in tax rates | 11 | 1.5 | — | —
– Non-taxable income and gains subject to tax at a lower rate | (1) | (0.1) | (1) | —
– Adjustment in respect of prior years | 3 | 0.4 | (3) | (0.3)
– (Recognition) / Derecognition of recognised deferred tax on losses and credits 2 | (102) | (14.1) | 150 | 16.1
– Non-recognition of current period generated deferred tax on losses and credits | — | — | 27 | 2.9
– Other exceptional adjustments | — | — | 5 | 0.5
– Other items 3 | (24) | (3.4) | (23) | (2.5)
Year ended 31 Dec | 64 | 8.8 | 406 | 43.7

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Driven by recognition of EUR 100m deferred tax assets on previously unrecognised losses of France Tax Group.
3 Majorly driven by AT1 dividends which are deductible in the French Tax regime in 2025 similar to the year 2024.
The closing effective tax rate for 2025 of 8.8 per cent (2024: 43.7 per cent, adjusted to exclude HSBC insurance business) is lower than the
French current tax rate of 25.8 per cent (2024: 25.8 per cent).

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Movement of deferred tax assets and liabilities
| Retirement benefits | Loans impairment allowances | Financial assets at FVOCI | Goodwill and intangibles | Tax losses | Expenses / loss provisions | Other | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Assets | 37 | 47 | 55 | 2 | 501 | 39 |  | 681
Liabilities | — | — | — | — | — | — | (34) | (34)
At 1 Jan 2025 | 37 | 47 | 55 | 2 | 501 | 39 | (34) | 647
Income statement (continuing operations) | (1) | 21 | — | — | 100 | 42 | 60 | 222
Income statement (discontinued operations) |  |  | — |  |  |  | (7) | (7)
Other comprehensive income (continuing operations) | (6) |  | (30) |  |  |  | 59 | 23
Other comprehensive income (discontinued operations) |  |  |  |  |  |  |  | —
Equity |  |  |  |  |  |  |  | —
Foreign exchange and other adjustments 1 | (3) | (1) | (29) |  |  |  | 40 | 7
At 31 Dec 2025 | 27 | 67 | (4) | 2 | 601 | 81 | 118 | 892
Assets | 27 | 67 |  | 2 | 601 | 81 | 118 | 896
Liabilities | — | — | (4) | — | — | — |  | (4)
Assets | 46 | 63 | 325 | 5 | 660 | 91 |  | 1,190
Liabilities | — | — | — | — | — | — | (238) | (238)
At 1 Jan 2024 2 | 46 | 63 | 325 | 5 | 660 | 91 | (238) | 952
Income statement (continuing operations) | (6) | (17) | — | (4) | (159) | (24) | (17) | (227)
Income statement (discontinued operations) |  |  | — |  |  |  | 12 | 12
Other comprehensive income (continuing operations) | (2) |  | (4) |  |  |  | (25) | (31)
Other comprehensive income (discontinued operations) | — |  | (47) |  |  |  | 46 | (1)
Equity |  |  |  |  |  | (26) |  | (26)
Foreign exchange and other adjustments | (1) | 1 | (219) | 1 |  | (2) | 188 | (32)
At 31 Dec 2024 2 | 37 | 47 | 55 | 2 | 501 | 39 | (34) | 647
Assets 2 | 37 | 47 | 55 | 2 | 501 | 39 |  | 681
Liabilities 2 |  |  |  |  |  |  | (34) | (34)

1 The movement in this line reflects the life insurance business in France.
2 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
French tax group
At 31 December 2025, HSBC Continental Europe had a n et deferred tax asset of EUR 892 million (2024: EUR 647 million) of which the French
tax group reported a net deferred tax asset of EUR 712 million (2024: EUR 536 million) including EUR 601 million (2024: EUR 501 million) in
respect of tax losses to be carried forward.
During 2025, management reassessed the likely availability of future taxable profits against which to recover the deferred tax assets of the
French tax group, taking into consideration the reversal of existing taxable temporary differences, the drivers of past business performance, and
management’s latest forecasts of future business performance, taking into account forecasting uncertainty. The assessment concluded the
recognition of deferred tax assets on tax losses of EUR 100 million during the year. These tax losses have no expiry date and the recognised
tax losses are forecast to be recovered in 10 years.
Unrecognised deferred tax
The French tax group has unrecognised deferred tax on losses carried forward of EUR 313 million tax value (EUR 1,210 million gross value) at
31 December 2025 (2024: EUR 177 million (EUR 685 million gross value).
CVAE
Since 2014, the CVAE contribution (cotisation sur la valeur ajoutée des entreprises) is included in ‘Income Tax’. In 2025, the current tax charge
is EUR 3 million (2024: EUR 4million) and the deferred tax credit is EUR 1 million (2024: deferred tax credit of EUR 1 million). Announced in the
2024 France Finance Act the CVAE rate will be reduced each year with full cancellation expected in 2030.

Tax expense (discontinued operations)
| 2025 | 2024 1
| Tax charge/(credit) on loss on discontinuance | Tax charge/(credit) on ordinary activities | Tax charge/(credit) on loss on discontinuance | Tax charge/(credit) on ordinary activities
| €m | €m | €m | €m
Profit/(loss) before tax | (1,370) | 44 | 66 | (173)
Current Tax | (60) | 32 |  | 33
Deferred Tax charge/(credit) | — | 7 | (5) | (7)
Total tax charge /(credit) | (60) | 39 | (5) | 26

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

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Notes on the consolidated financial statements

The sale of the life insurance business and the retained portfolio of home and certain other loans in France meets the criteria of discontinued
operations under IFRS 5 and, accordingly, the tax expense associated with the loss on discontinuance and the ordinary activities of the
discontinued operations are shown above.

9 Dividends

Dividends to shareholders of the parent company
| 2025 | 2024
| Per share | Total | Per share | Total
| € | €m | € | €m
Dividends paid on ordinary shares |  |  |  |
In respect of previous year: |  |  |  |
– exceptional dividend | — | — | — | —
– dividend paid | — | — | — | —
In respect of current year: |  |  |  |
– interim dividend | 1.06 | 282 | — | —
Total dividend paid to shareholders | 1.06 | 282 | — | —
Total coupons on capital instruments classified as equity 1 |  | 98 |  | 83

1 Coupons paid on other equity instruments are not included in the calculation of the dividends per share.
Dividends related to 2025
The Board of Directors held on 23 October 2025 decided the distribution of an interim dividend of EUR 1.06 per share in respect of the year
2025, to be paid to the 265,583,192 outstanding shares at this date. The interim dividend was paid on 27 November 2025.
Dividends related to 2024
On 24 March 2025, the Combined General Meeting approved the recommendation made by the Board of Directors, on 18 February 2025, not
to distribute a dividend in respect of the year 2024.
Other equity instruments

Total coupons on capital instruments classified as equity
|  | 2025 | 2024
| First call date | €m | €m
Perpetual subordinated capital instruments |  |  |
– EUR 200 million issued at 5.73% | May 2022 | 12 | 12
– EUR 300 million issued at 6.45% | March 2023 | 19 | 20
– EUR 250 million issued at 3.46%1 | December 2024 | — | 9
– EUR 250 million issued at 5.625%1 | December 2029 | 14 | —
– EUR 250 million issued at 3M Euribor+ 4.06% | March 2027 | 16 | 19
– EUR 235 million issued at 5Y Euro Swap Rate + 5.55% | January 2022 | 13 | 13
– EUR 200 million issued at 6.907%2,3 | January 2025 | 24 | 10
Total |  | 98 | 83

1 On 18 December 2024, EUR 250 million instrument was redeemed and replaced with the instrument of the same nominal and the interest rate of 5.625%.
2 On 30 December 2024, the interest on the EUR 200 million perpetual subordinated security issued on 21 January 2019 at 5.039 per cent was revised to 6.907
per cent.
3 Following ECB approval in December 2025 for the redemption of the EUR 200 million Perpetual Subordinated Resettable Additional Tier 1 instrument (issued in
2019), the instrument was reclassified from equity to liabilities as at 31 December 2025. The Principal repayment of the instrument was completed on 2 January
2026. A EUR 14 million dividend relating to the above AT1 instrument, payable in April 2026, was also recognised for the year 2025.

10 Earnings per share
Basic earnings per ordinary share were calculated by dividing the basic earnings of EUR (657) million by the weighted average number of
ordinary shares outstanding during the year, excluding own shares held, of 265,583,192 (full year 2024: earnings of EUR 568 million and
214,212,855 weighted average number of shares).
Diluted earnings per share were calculated by dividing the basic earnings, which require no adjustment for the dilutive of potential ordinary
shares (including share options outstanding not yet exercised), by the weighted average number of ordinary shares outstanding, excluding own
shares held, plus the weighted average number of ordinary shares that would be issued on ordinary conversion of all the potential dilutive
ordinary shares of 265,583,192 (full year 2024: 214,212,855 shares). At 31 December 2025, no potentially dilutive ordinary share had been
issued.

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Notes on the consolidated financial statements

Basic and diluted earnings per share
| 2025 | 2024 1
| Profit/ (loss) | Number of shares | Per share | Profit/ (loss) | Number of shares | Per share
| €m | (million) | € | €m | (million) | €
Basic earnings per share | (657) | 266 | (2.47) | 568 | 214 | 2.65
Diluted earnings per share | (657) | 266 | (2.47) | 568 | 214 | 2.65
– Basic/Diluted earnings per ordinary share in respect of continuing operations | 648 | 266 | 2.44 | 697 | 214 | 3.25
– Basic/Diluted earnings per ordinary share in respect of discontinued operations | (1,305) | 266 | (4.91) | (129) | 214 | (0.6)

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.

11 Segmental analysis

Profit/(loss) for the period by global business (continuing operations)
| At 31 Dec 2025
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
Net operating income before change in expected credit losses and other credit risk provisions | 2,971 | 576 | 136 | 3,683
– of which: net interest income/(expense) | 1,475 | 147 | (240) | 1,382
– of which: Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 484 | 6 | 328 | 818
Change in expected credit losses and other credit impairment charges | (172) | 5 | 1 | (166)
Net operating income | 2,799 | 581 | 137 | 3,517
Total operating expenses | (2,141) | (450) | (201) | (2,792)
Profit/(loss) before tax | 658 | 131 | (64) | 725

Profit/(loss) for the period by global business (continuing operations) (continued)
| At 31 Dec 2024 1,2
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
Net operating income before change in expected credit losses and other credit risk provisions | 2,971 | 444 | 132 | 3,547
– of which: net interest income/(expense) | 1,570 | 175 | (50) | 1,695
– of which: Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 314 | 4 | 166 | 484
Change in expected credit losses and other credit impairment charges | (100) | 7 | 2 | (91)
Net operating income | 2,871 | 451 | 134 | 3,456
Total operating expenses | (1,868) | (388) | (62) | (2,318)
Profit/(loss) before tax | 1,003 | 63 | 72 | 1,138

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
2 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.

Revenue by country (continuing operations)1
| At 31 Dec 2025
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
France | 1,290 | 137 | 121 | 1,548
Germany | 847 | 248 | 10 | 1,105
EEA Branches | 750 | — | 2 | 752
Malta and Other countries | 84 | 191 | 3 | 278
Revenue 1 | 2,971 | 576 | 136 | 3,683

| At 31 Dec 2024 2,3
France | 1,262 | 90 | 126 | 1,478
Germany | 861 | 124 | 1 | 986
EEA Branches | 760 | 1 | 4 | 765
Malta and Other Countries | 88 | 229 | 1 | 318
Revenue 1 | 2,971 | 444 | 132 | 3,547

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
3 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.

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Balance sheet information
| CIB | IWPB | Corporate Centre | Total
| €m | €m | €m | €m
At 31 Dec 2025 |
Loans and advances to customers 4 | 38,581 | 4,245 | 9 | 42,835
Loans and advances to customers classified as held for sale 1 | 294 | — | — | 294
Customer accounts | 90,988 | 6,454 | (335) | 97,107
Customer accounts classified as held for sale 1 | 10,506 | — | — | 10,506
At 31 Dec 2024 3
Loans and advances to customers 4 | 40,337 | 4,267 | 6,684 | 51,288
Loans and advances to customers classified as held for sale 2 | — | 298 | — | 298
Customer accounts | 90,431 | 7,055 | (421) | 97,065
Customer accounts classified as held for sale 2 | — | 2,010 | — | 2,010

1 Includes loans and advances and customers accounts related to the custody and fund administration business in Germany.
2 Includes loans and advances and customers accounts related to the private banking business in Germany.
3 Comparative information for the prior year has been represented to reflect the revised operating segment structure in HSBC Continental Europe, which became
effective on 1 January 2025.
4 Includes EUR 30,346 million (2024: EUR 33,737 million) related to corporate and commercial loans and advances to customers with a total provision of EUR 516
million (2024: EUR 432 million).

12 Trading assets

|  | 2025 | 2024
|  | €m | €m
Treasury and other eligible bills |  | 3,310 | 1,231
Debt securities |  | 20,182 | 14,818
Equity securities |  | 6,903 | 6,297
Trading securities |  | 30,395 | 22,346
Loans and advances to banks |  | 286 | 184
Loans and advances to customers |  | 120 | 323
Year ended 31 Dec |  | 30,801 | 22,853

13 Fair values of financial instruments carried at fair value
Control framework
Fair values are subject to a control framework designed to ensure that they are either determined, or validated, by a function independent of
the risk taker.
For all financial instruments where fair values are determined by reference to externally quoted prices or observable pricing inputs to models,
independent price determination or validation is utilised. In inactive markets, we source alternative market information to validate the financial
instrument’s fair value, with greater weight given to information that is considered to be more relevant and reliable. The factors that are
considered in this regard are, inter alia:
– the extent to which prices may be expected to represent genuine traded or tradeable prices;
– the degree of similarity between financial instruments;
– the degree of consistency between different sources;
– the process followed by the pricing provider to derive the data;
– the elapsed time between the date to which the market data relates and the balance sheet date; and
– the manner in which the data was sourced.
For fair values determined using valuation models, the control framework includes development or validation by independent support functions
of the model logic, inputs, model outputs and adjustments. Valuation models are subject to a process of due diligence before becoming
operational and are calibrated against external market data on an ongoing basis.
Changes in fair value are generally subject to a profit and loss analysis process and are disaggregated into high-level categories including
portfolio changes, market movements and other fair value adjustments.Fair value adjustments take into consideration additional factors not
incorporated within the primary product valuation model that would otherwise be considered by a market participant. Adjustments are
calculated using model infrastructure including those within primary valuation systems.
The majority of financial instruments measured at fair value are in MSS. MSS’s fair value governance structure comprises its Finance function
and Valuation Committees. Finance is responsible for establishing procedures governing valuation and ensuring fair values are in compliance
with accounting standards. The fair values are reviewed by the Valuation Committees, which consist of independent support functions.
Financial liabilities measured at fair value
In certain circumstances, HSBC Continental Europe records its own debt in issue at fair value, based on quoted prices in an active market for
the specific instrument. When quoted market prices are unavailable, the own debt in issue is valued using valuation techniques, the inputs for
which are based either on quoted prices in an inactive market for the instrument or are estimated by comparison with quoted prices in an active

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Notes on the consolidated financial statements

market for similar instruments. In both cases, the fair value includes the effect of applying the credit spread that is appropriate to the HSBC
Continental Europe's liabilities.
Structured notes issued and certain other hybrid instruments are included within trading liabilities and are measured at fair value.The spread
applied to these instruments is derived from the spreads at which HSBC Continental Europe issues structured notes.
Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy:
– Level 1 – Valuation technique using quoted market price: financial instruments with quoted prices for identical instruments in active markets
that HSBC Continental Europe can access at the measurement date.
– Level 2 – Valuation technique using observable inputs: financial instruments with quoted prices for similar instruments in active markets or
quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs
are observable.
– Level 3 – Valuation technique with significant unobservable inputs: financial instruments valued using valuation techniques where one or more
significant inputs are unobservable.
Breakdown of financial instruments recorded at fair value by level of fair value
measurement

Financial instruments carried at fair value and bases of valuation
| 2025 | 2024
| Level 1 – quoted market price | Level 2 – using observable inputs | Level 3 – with significant non-observable inputs | Total | Level 1 – quoted market price | Level 2 – using observable inputs | Level 3 – with significant non-observable inputs | Total
At 31 Dec | €m | €m | €m | €m | €m | €m | €m | €m
Assets |  |  |  |  |  |  |  |
Trading assets | 27,856 | 2,913 | 32 | 30,801 | 21,531 | 1,156 | 166 | 22,853
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 764 | 663 | 192 | 1,619 | 719 | 592 | 252 | 1,563
Derivatives | 838 | 39,540 | 201 | 40,579 | 595 | 42,405 | 251 | 43,251
Financial investments | 15,676 | 4,185 | 18 | 19,879 | 11,918 | 4,396 | 1,088 | 17,402
Assets held for sale 1 | — | — | — | — | 5,415 | 13,870 | 2,968 | 22,253
Liabilities |  |  |  |  |  |  |  |
Trading liabilities | 16,857 | 1,519 | — | 18,376 | 16,200 | 280 | — | 16,480
Financial liabilities designated at fair value | 166 | 9,409 | 1,511 | 11,086 | 167 | 8,252 | 1,487 | 9,906
Derivatives | 809 | 32,035 | 334 | 33,178 | 714 | 40,862 | 281 | 41,857
Liabilities of disposal groups held for sale 1 | — | — | — | — | — | 125 | — | 125

1 The 2024 assets and liabilities held for sale include disposal group related to the planned sale of the life insurance business in France and the private banking
business in Germany.
There were no material transfers between Level 1 and Level 2 during the reporting period.
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers into and out of
levels of the fair value hierarchy are normally attributable to observability of valuation inputs and price transparency.
Fair value adjustments
Fair value adjustments are adopted when we determine there are additional factors considered by market participants that are not incorporated
within the valuation model.
Movements in the level of fair value adjustments do not necessarily result in the recognition of profits or losses within the income statement,
such as when models are enhanced and fair value adjustments may no longer be required.
Bid-offer
IFRS 13 'Fair value measurement' requires use of the price within the bid-offer spread that is most representative of fair value. Valuation
models will typically generate mid-market values. The bid-offer adjustment reflects the extent to which bid-offer costs would be incurred if
substantially all residual net portfolio market risks were closed using available hedging instruments or by disposing of or unwinding the position.
Uncertainty
Certain model inputs may be less readily determinable from market data, and/or the choice of model itself may be more subjective. In these
circumstances, an adjustment may be necessary to reflect the likelihood that market participants would adopt more conservative values for
uncertain parameters and/or model assumptions than those used in the valuation model.
Credit Valuation adjustment ('CVA')
The CVA is an adjustment to the valuation of over-the-counter ('OTC') derivative contracts to reflect the possibility that the counterparty may
default and that HSBC Continental Europe may not receive the full market value of the transactions.

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Notes on the consolidated financial statements

Debit valuation adjustment ('DVA')
The DVA is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC Continental Europe may default, and
that it may not pay the full market value of the transactions.
Funding fair value adjustment ('FFVA')
The FFVA is calculated by applying future market funding spreads to the expected future funding exposure of any uncollateralised component
of the OTC derivative portfolio. The expected future funding exposure is calculated by a simulation methodology, where available, and is
adjusted for events that may terminate the exposure, such as the default of HSBC Continental Europe or the counterparty. The FFVA and DVA
are calculated independently.
Model limitation
Models used for portfolio valuation purposes may be based upon a simplifying set of assumptions that do not capture all current and future
material market characteristics. In these circumstances, model limitation adjustments are adopted.
Inception profit (Day 1 P&L reserves)
Inception profit adjustments are adopted by HSBC Continental Europe when the fair value estimated by a valuation model is based on one or
more significant unobservable inputs.
Fair value valuation bases

Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3
| Assets | Liabilities
| Financial Invest- ments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Total Assets | Trading liabilities | Designated at fair value | Derivatives | Total liabilities
| €m | €m | €m | €m | €m | €m | €m | €m | €m
At 31 Dec 2025 |  |  |  |  |  |  |  |  |
Private equity including strategic investments | 18 | 1 | 192 | — | 211 | — | 1 | — | 1
Structured notes | — | — | — | — | — | — | 1,510 | — | 1,510
Derivatives | — | — | — | 201 | 201 | — | — | 334 | 334
Bonds | — | — | — | — | — | — | — | — | —
Loans | — | 31 | — | — | 31 | — | — | — | —
Other portfolios | — | — | — | — | — | — | — | — | —
Total | 18 | 32 | 192 | 201 | 443 | — | 1,511 | 334 | 1,845
At 31 Dec 2024 |  |  |  |  |  |  |  |  |
Private equity including strategic investments | 16 | 1 | 236 | — | 253 | — | 1 | — | 1
Structured notes | — | — | — | — | — | — | 1,483 | — | 1,483
Derivatives | — | — | — | 251 | 251 | — | — | 281 | 281
Bonds | 1,072 | — | 16 | — | 1,088 | — | — | — | —
Loans | — | 165 | — | — | 165 | — | — | — | —
Other portfolios | — | — | — | — | — | — | 3 | — | 3
Total | 1,088 | 166 | 252 | 251 | 1,757 | — | 1,487 | 281 | 1,768

Private equity including strategic investments
The fair value of a private equity investment (including strategic investments) is estimated on the basis of an analysis of the investee’s financial
position and results, risk profile, prospects and other factors; by reference to market valuations for similar entities quoted in an active market;
the price at which similar companies have changed ownership; or from published net asset values (‘NAV’) received. If necessary, adjustments
are made to the NAV of funds to obtain the best estimate of fair value.
Structured notes
The fair value of Level 3 structured notes is derived from the fair value of the underlying debt security, and the fair value of the embedded
derivative is determined as described in the section below on derivatives. These structured notes comprise principally equity-linked notes and
rate-linked notes, issued by HSBC Continental Europe, which provide the counterparty with a return linked to the performance of equity
securities and other portfolios. Examples of the unobservable parameters include long-dated equity volatilities and correlations between equity
prices, and interest and foreign exchange rates.
Derivatives
Over-the-counter (i.e. non-exchange traded) derivatives valuation models calculate the present value of expected future cash flows, based upon
‘no-arbitrage’ principles. For many vanilla derivative products, such as interest rate swaps and European options, the modelling approaches
used are standard across the industry. For more complex derivative products, there may be some divergence in market practice. Inputs to
valuation models are determined from observable market data wherever possible, including prices available from exchanges, dealers, brokers or
providers of consensus pricing. Certain inputs may not be observable in the market directly, but can be determined from observable prices via
model calibration procedures. Finally, some inputs are not observable, but can generally be estimated from historic data or other sources.

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Notes on the consolidated financial statements

Bonds and Loans
The fair value input for bonds and secondary market loans is price, determined utilising market standard valuation techniques such as price-
based, discounted cash flows, and internal models. Where uncertainty of inputs and assumptions exist in the determination of a fair value price
and are significant, the position will be considered Level 3. Examples of such inputs are credit spreads, interest rate spreads, choice of
comparables, earning projections and liquidity/ observability of the underlying currency.
Reconciliation of fair value measurements in Level 3 of the fair value hierarchy

Movement in Level 3 financial instruments
| Assets | Liabilities
| Financial Investments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading liabilities | Designaed at fair value | Derivatives
| €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2025 | 1,088 | 166 | 252 | 251 | — | 1,487 | 281
Total gains/(losses) on assets and total (gains)/ losses on liabilities recognised in profit or loss | — | (1) | (10) | 145 | — | 224 | (238)
– net income/(losses) from financial instruments held for trading or managed on a fair value basis 1 | — | (1) | — | 145 | — | 224 | (238)
– net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | — | — | (4) | — | — | — | —
– other income/ (losses) | — | — | (6) | — | — | — | —
Total gains/(losses) recognised in other comprehensive income | 12 | — | — | — | — | — | —
Purchases | 101 | 29 | — | — | — | — | —
New issuances | — | — | — | — | — | 942 | —
Sales | (25) | (25) | (1) | — | — | — | —
Settlements | (27) | (115) | (49) | (136) | — | (272) | 325
Transfer out | (1,131) | (22) | — | (91) | — | (962) | (93)
Transfer in | — | — | — | 32 | — | 92 | 59
At 31 Dec 2025 | 18 | 32 | 192 | 201 | — | 1,511 | 334
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2025 | — | (1) | (6) | 62 | — | (197) | (149)
– net income/(losses) from financial instruments | — | (1) | — | 62 | — | — | (149)
– other income/ (losses) | — | — | (6) | — | — | (197) | —
At 1 Jan 2024 | 797 | 240 | 2,172 | 178 | — | 1,523 | 256
Total gains/(losses) on assets and total (gains)/ losses on liabilities recognised in profit or loss | — | (2) | (15) | 161 | — | 131 | 156
– net income/(losses) from financial instruments held for trading or managed on a fair value basis | — | (2) | — | 161 | — | 131 | 156
– net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | — | — | (41) | — | — | — | —
– other income/ (losses) | — | — | 26 | — | — | — | —
Total gains/(losses) recognised in other comprehensive income | (10) | — | — | — | — | — | —
Purchases | 1,222 | 11 | 339 | — | — | — | —
New issuances | — | — | — | — | — | 771 | —
Sales | (41) | (29) | (30) | — | — | — | —
Settlements 1 | (732) | (11) | (2,242) | (98) | — | (604) | (151)
Transfer out | (148) | (44) | (7) | (81) | — | (754) | (74)
Transfer in | — | 1 | 35 | 91 | — | 420 | 94
At 31 Dec 2024 | 1,088 | 166 | 252 | 251 | — | 1,487 | 281
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2024 | — | (2) | 27 | 112 | — | (14) | (94)
– net income/(losses) from financial instruments | — | (2) | — | 112 | — | — | (94)
– other income/ (losses) | — | — | 27 | — | — | (14) | —

1"Settlements" in 2024 includes re-classification to held for sale of financial investments of EUR 486 million and financial assets designated and otherwise
mandatorily measured at fair value through profit or loss of EUR 2.5 billion, related to the planned sale of the life insurance business in France.

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Notes on the consolidated financial statements

Effects of changes in significant unobservable assumptions to reasonably possible alternatives

Sensitivity of Level 3 fair values to reasonably possible alternative assumptions
| At 31 Dec 2025 | At 31 Dec 2024
| Reflected in profit or loss | Reflected in other comprehensive Income | Reflected in profit or loss | Reflected in other comprehensive Income
| Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes
| €m | €m | €m | €m | €m | €m | €m | €m
Derivatives/trading assets/ trading liabilities 1 | 14 | (14) | — | — | 11 | (11) | — | —
Financial assets and liabilities designated and otherwise mandatorily measured at fair value | 48 | (49) | — | — | 22 | (22) | — | —
Financial investments | — | — | 1 | (1) | — | — | 3 | (6)
Total | 62 | (63) | 1 | (1) | 33 | (33) | 3 | (6)

1 Derivatives, trading assets and trading liabilities are presented as one category to reflect the manner in which these financial instruments are
risk-managed.

Sensitivity of Level 3 fair values to reasonably possible alternative assumptions by instrument type
| Reflected in profit or loss | Reflected in OCI
| Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes
| €m | €m | €m | €m
At 31 Dec 2025 |  |  |  |
Private equity including strategic investments | 41 | (42) | 1 | (1)
Structured notes | 7 | (7) | — | —
Derivatives | 13 | (13) | — | —
Bonds | — | — | — | —
Loans | 1 | (1) | — | —
Other portfolios | — | — | — | —
Total | 62 | (63) | 1 | (1)
At 31 Dec 2024 |  |  |  |
Private equity including strategic investments | 15 | (15) | 1 | (1)
Structured notes | 7 | (7) | — | —
Derivatives | 10 | (10) | — | —
Bonds | — | — | 2 | (5)
Loans | 1 | (1) | — | —
Other portfolios | — | — | — | —
Total | 33 | (33) | 3 | (6)

The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95 per cent confidence interval.
Methodologies take account of the nature of the valuation technique employed, as well as the availability and reliability of observable proxy and
historical data.
When the fair value of a financial instrument is affected by more than one unobservable assumption, the above table reflects the most
favourable or most unfavourable change from varying the assumptions individually.

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Notes on the consolidated financial statements

Key unobservable inputs to Level 3 financial instruments

Quantitative information about significant unobservable inputs in Level 3 valuations
| Fair value 1 |  |  | 2025 | 2024
|  |  | Full range of inputs | Full range of inputs
| Assets | Liabilities | Valuation technique | Key unobservable inputs | Lower | Higher | Lower | Higher
| €m | €m | % | % | % | %
Private equity including strategic investments | 211 | 1 | Price - Net asset value | Current Value/Cost | — | 1 | — | 1
Structured notes | — | 1,510 |  |  |  |  |  |
– equity-linked notes | — | 1,087 | Model - Option model | Equity Volatility | 15 | 25 | 14 | 18
Model - Option model | Equity / Equity and Equity Index Correlation | 29 | 100 | 26 | 99
– FX-linked notes | — | — | Model - Option model | FX Volatility | — | — | — | —
– other | — | 423 |  |  |  |  |  |
Derivatives | 201 | 334 |  |  |  |  |  |
Interest rate derivatives | 119 | 200 |  |  |  |  |  |
– securitisation swaps | 3 | 65 | Model - DCF 2 | Constant Prepayment Rate | 5 | 10 | 5 | 10
– long-dated swaptions | — | — | Model - Option model | IR Volatility | — | — | — | —
– other | 116 | 135 |  |  |  |  |  |
Foreign exchange derivatives | 14 | 14 |  |  |  |  |  |
– foreign exchange options | 2 | 3 | Model - Option model | FX Volatility | 4 | 14 | 4 | 14
– foreign exchange other | 12 | 11 |  |  |  |  |  |
Equity derivatives | 68 | 113 |  |  |  |  |  |
– long-dated single stock options | — | — | Model - Option model | Equity Volatility | — | — | — | —
– other | 68 | 113 |  |  |  |  |  |
Credit derivatives | — | 7 |  |  |  |  |  |
– other | — | 7 |  |  |  |  |  |
Bonds | — | — | Market proxy | Mid quotes | — | — | — | —
Loans | 31 | — | Market proxy | Mid quotes | — | — | — | —
Other portfolio | — | — |  |  |  |  |  |
At 31 Dec 2025 | 443 | 1,845 |  |  |  |  |  |

1 Including Level 3 balances with HSBC entities.
2 Discounted cash flow.
Private equity including strategic investments
Given the bespoke nature of the analysis in respect of each holding, it is not practical to quote a range of key unobservable inputs. The key
unobservable inputs would be price and correlation. The valuation approach includes using a range of inputs that include company specific
financials, traded comparable companies multiples, published net asset values and qualitative assumptions, which are not directly comparable
or quantifiable.
Prepayment rates
Prepayment rates are a measure of the anticipated future speed at which a loan portfolio will be repaid in advance of the due date. They vary
according to the nature of the loan portfolio and expectations of future market conditions, and may be estimated using a variety of evidence,
such as prepayment rates implied from proxy observable security prices, current or historical prepayment rates and macroeconomic modelling.
Market proxy
Market proxy pricing may be used for an instrument for which specific market pricing is not available, but evidence is available in respect of
instruments that have some characteristics in common. In some cases it might be possible to identify a specific proxy, but more generally
evidence across a wider range of instruments will be used to understand the factors that influence current market pricing and the manner of
that influence.
Volatility
Volatility is a measure of the anticipated future variability of a market price. It varies by underlying reference market price, and by strike and
maturity of the option.
Certain volatilities, typically those of a longer-dated nature, are unobservable and estimated from observable data. The range of unobservable
volatilities reflects the wide variation in volatility inputs by reference market price. The core range is significantly narrower than the full range
because these examples with extreme volatilities occur relatively rarely within the HSBC Continental Europe portfolio.
Correlation
Correlation is a measure of the inter-relationship between two market prices, and is expressed as a number between minus one and one. It is
used to value more complex instruments where the payout is dependent upon more than one market price. There is a wide range of
instruments for which correlation is an input, and consequently a wide range of both same-asset correlations and cross-asset correlations is
used. In general, the range of same-asset correlations will be narrower than the range of cross-asset correlations.

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Notes on the consolidated financial statements

Unobservable correlations may be estimated based upon a range of evidence, including consensus pricing services, HSBC Continental Europe
trade prices, proxy correlations and examination of historical price relationships. The range of unobservable correlations quoted in the table
reflects the wide variation in correlation inputs by market price pair.
Credit spread
Credit spread is the premium over a benchmark interest rate required by the market to accept lower credit quality. In a discounted cash flow
model, the credit spread increases the discount factors applied to future cash flows, thereby reducing the value of an asset. Credit spreads may
be implied from market prices and may not be observable in more illiquid markets.
Inter-relationships between key unobservable inputs
Key unobservable inputs to Level 3 financial instruments may not be independent of each other. As described above, market variables may be
correlated. This correlation typically reflects the manner in which different markets tend to react to macroeconomic or other events.
Furthermore, the effect of changing market variables on the HSBC Continental Europe portfolio will depend on its net risk position in respect of
each variable.

14 Fair values of financial instruments not carried at fair value

Fair value of financial instruments not carried at fair value and basis of valuation
|  | Fair value
| Carrying amount | Level 1 – Quoted market price | Level 2 – Using observable inputs | Level 3 – Significant unobservable inputs | Total
| €m | €m | €m | €m | €m
At 31 Dec 2025 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 5,715 | — | 5,715 | — | 5,715
Loans and advances to customers | 42,835 | — | — | 42,837 | 42,837
Reverse repurchase agreements – non-trading | 29,308 | — | 29,308 | — | 29,308
Financial investments – at amortised cost | 8,124 | 7,166 | 994 | — | 8,160
Liabilities |  |  |  |  |
Deposits by banks | 14,514 | — | 14,514 | — | 14,514
Customer accounts | 97,107 | — | 97,113 | — | 97,113
Repurchase agreements – non-trading | 14,486 | — | 14,486 | — | 14,486
Debt securities in issue | 14,129 | — | 14,275 | — | 14,275
Subordinated liabilities | 1,894 | — | 1,964 | — | 1,964
At 31 Dec 2024 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 5,703 | — | 5,703 | — | 5,703
Loans and advances to customers 1 | 51,288 | — | — | 50,159 | 50,159
Reverse repurchase agreements – non-trading | 25,764 | — | 25,764 | — | 25,764
Financial investments – at amortised cost | 3,338 | 2,363 | 965 | — | 3,328
Liabilities |  |  |  |  |
Deposits by banks | 11,820 | — | 11,820 | — | 11,820
Customer accounts | 97,065 | — | 97,078 | — | 97,078
Repurchase agreements – non-trading | 12,344 | — | 12,344 | — | 12,344
Debt securities in issue | 15,257 | — | 15,367 | — | 15,367
Subordinated liabilities | 1,941 | — | 1,993 | — | 1,993

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion.
Other financial instruments not carried at fair value are typically short-term in nature and reprice to current market rates frequently. Accordingly,
their carrying amount is a reasonable approximation of fair value. This includes cash and balances at central banks which is measured at
amortised cost.
Valuation
The fair value measurement is HSBC Continental Europe's estimate of the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. It does not reflect the economic benefits and costs
expected to flow from the instruments’ cash flows over their expected future lives. Other reporting entities may use different valuation
methodologies and assumptions in determining fair values for which no observable market prices are available.
Loans and advances to banks and customers
The fair value of loans and advances is based on observable market transactions, where available. In the absence of observable market
transactions, fair value is estimated using valuation models that incorporate a range of input assumptions. These assumptions may include
value estimates from third-party brokers which reflect over-the-counter trading activity; forward-looking discounted cash flow models using
assumptions which HSBC Continental Europe believes are consistent with those which would be used by market participants in valuing such
loans; and trading inputs from other market participants which includes observed primary and secondary trades.

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Notes on the consolidated financial statements

Loans are grouped, as far as possible, into homogeneous groups and stratified by loans with similar characteristics to improve the accuracy of
estimated valuation outputs. The stratification of a loan book considers all material factors, including vintage, origination period, estimates of
future interest rates, prepayment speeds, delinquency rates, loan-to-value ratios, the quality of collateral, default probability, and internal credit
risk ratings.
The fair value of a loan reflects both loan impairments at the balance sheet date and estimates of market participants’ expectations of credit
losses over the life of the loans, and the fair value impact of repricing between origination and the balance sheet date.
Financial investments
The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are
determined using valuation techniques that incorporate the prices and future earnings streams of equivalent quoted securities.
Deposits by banks and customer accounts
Fair values are estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities. The fair value
of a deposit repayable on demand is approximated by its carrying value.
Debt securities in issue and subordinated liabilities
Fair values are determined using quoted market prices at the balance sheet date where available, or by reference to quoted market prices for
similar instruments.
Repurchase and reverse repurchase agreements – non-trading
Fair values approximate carrying amounts as their balances are generally short dated.

15 Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss

| 2025 | 2024
| Designated at fair value and otherwise mandatorily measured at fair value | Designated at fair value and otherwise mandatorily measured at fair value
| €m | €m
Securities | 974 | 1,039
– treasury and other eligible bills | — | 10
– debt securities | 216 | 279
– equity securities | 758 | 750
Loans and advances to banks and customers | — | —
Other 1 | 645 | 524
Year ended 31 Dec | 1,619 | 1,563

1 Includes default fund contribution.

16 Derivatives

Notional contract amounts and fair values of derivatives by product contract type held by HSBC Continental Europe
| Notional contract amount | Fair value – Assets | Fair value – Liabilities
| Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Foreign exchange | 1,223,781 | 252 | 8,335 | 36 | 8,371 | 8,461 | — | 8,461
Interest rate | 3,655,604 | 41,382 | 44,319 | 45 | 44,364 | 36,160 | 116 | 36,276
Equities | 143,345 | — | 965 | — | 965 | 1,501 | — | 1,501
Credit | 17,414 | — | 163 | — | 163 | 224 | — | 224
Commodity and other | 2,336 | — | 258 | — | 258 | 258 | — | 258
Gross total fair values | 5,042,480 | 41,634 | 54,040 | 81 | 54,121 | 46,604 | 116 | 46,720
Offset (Note 28) | — | — | (13,542) | — | (13,542) | (13,542) | — | (13,542)
At 31 Dec 2025 | 5,042,480 | 41,634 | 40,498 | 81 | 40,579 | 33,062 | 116 | 33,178
Foreign exchange | 1,307,338 | 261 | 15,988 | 9 | 15,997 | 15,794 | — | 15,794
Interest rate | 4,351,904 | 39,993 | 40,933 | 89 | 41,022 | 39,647 | 67 | 39,714
Equities | 135,643 | — | 948 | — | 948 | 1,025 | — | 1,025
Credit | 6,708 | — | 54 | — | 54 | 93 | — | 93
Commodity and other | 2,095 | — | 69 | — | 69 | 70 | — | 70
Gross total fair values | 5,803,688 | 40,254 | 57,992 | 98 | 58,090 | 56,629 | 67 | 56,696
Offset (Note 28) | — | — | (14,839) | — | (14,839) | (14,839) | — | (14,839)
At 31 Dec 2024 | 5,803,688 | 40,254 | 43,153 | 98 | 43,251 | 41,790 | 67 | 41,857

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Notes on the consolidated financial statements

The notional contract amounts of derivatives held for trading purposes and derivatives designated in hedge accounting relationships indicate the
nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.
Derivative asset and liability fair values decreased during 2025, driven mainly by yield curve movements and changes in foreign exchange rates.
Use of derivatives
HSBC Continental Europe undertakes derivatives activity for three primary purposes: to create risk management solutions for clients, to
manage the portfolio risks arising from client business and to manage and hedge our own risks.
Trading derivatives
Most of HSBC Continental Europe’s derivative transactions relate to sales and trading activities. Sales activities include the structuring and
marketing of derivative products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities
include market-making and risk management. Market-making entails quoting bid and offer prices to other market participants for the purpose of
generating revenues based on spread and volume. Risk management activity is undertaken to manage the risk arising from client transactions,
with the principal purpose of retaining client margin.
Derivatives valued using models with unobservable inputs
The difference between the fair value at initial recognition (the transaction price) and the value that would have been derived had the valuation
techniques used for subsequent measurement been applied at initial recognition, less subsequent releases, is in the following table:

Unamortised balance of derivatives valued using models with significant unobservable inputs
| 2025 | 2024
| €m | €m
Unamortised balance at 1 Jan | 2 | 4
Deferral on new transactions | 6 | —
Recognised in the income statement during the year: | (7) | (2)
– amortisation | (7) | (2)
– subsequent to unobservable inputs becoming observable | — | —
– maturity, termination or offsetting derivative | — | —
– risk hedged | — | —
Exchange differences and other | — | —
At 31 Dec | 1 | 2

Hedge Accounting derivatives
HSBC Continental Europe uses derivatives (principally interest rate swaps) for hedging purposes in the management of its own asset and
liability portfolios and structural positions. This enables us to optimise the overall cost of accessing debt capital markets, and to mitigate the
market risk which would otherwise arise from structural imbalances in the maturity and other profiles of its assets and liabilities.
The accounting treatment of hedge transactions varies according to the nature of the instrument hedged and the type of hedge transactions.
Derivatives may qualify as hedges for accounting purposes if they are fair value hedges, or cash flow hedges, or hedges in net investment of
foreign operations. These are described under the relevant headings below.
Fair value hedges
HSBC Continental Europe’s fair value hedges principally consist of interest rate swaps that are used to protect against changes due to
movements in market interest rates in the fair value of fixed-rate long-term financial instruments of portfolio and fixed rates loans. For qualifying
fair value hedges, all changes in the fair value of the derivative and in the fair value of the item in relation to the risk being hedged are
recognised in the income statement. If the hedge relationship is terminated, the fair value adjustment to the hedged item continues to be
reported as part of the basis of the item and is amortised to the income statement as a yield adjustment over the remainder of the hedging
period.

Hedging instrument by hedged risk
| Hedging Instrument
|  | Carrying amount | Balance sheet presentation | Change in fair value
| Notional amount 1 | Assets | Liabilities
Hedged Risk | €m | €m | €m | €m
Interest rate 2 | 13,501 | 45 | 114 | Derivatives | (93)
At 31 Dec 2025 | 13,501 | 45 | 114 |  | (93)

Interest rate 2 | 13,334 | 89 | 64 | Derivatives | (102)
At 31 Dec 2024 | 13,334 | 89 | 64 |  | (102)

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at
the balance sheet date; they do not represent amounts at risk.
2 The hedged risk ‘interest rate’ includes inflation risk.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
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Notes on the consolidated financial statements

Hedged item by hedged risk
| Hedged Item | Ineffectiveness
| Carrying amount | Accumulated fair value hedge adjustments included in carrying amount | Balance sheet presentation | Change in fair value 1 | Recognised in profit and loss | Profit and loss presentation
| Assets | Liabilities | Assets | Liabilities
Hedged Risk | €m | €m | €m | €m | €m | €m
Interest rate 2 | 13,817 | — | 97 | — | Financial assets at fair value through other comprehensive income | 82 | (8) | Net income from financial instruments held for trading or managed on a fair value basis
— | — | — | — | L&A to Banks | —
208 | — | (4) | — | L&A to Customers | 3
— | — | — | — | Reverse repurchase agreements non- trading | —
— | — | — | — | HTC (Amortised Cost) | —
— | 33 | — | (4) | Debt securities in issue | —
— | — | — | — | Subordinated liabilities and deposits by Banks | —
At 31 Dec 2025 | 14,025 | 33 | 93 | (4) |  | 85 | (8) |

Interest rate 2 | 13,149 | — | 6 | — | Financial assets at fair value through other comprehensive income | 87 | (3) | Net income from financial instruments held for trading or managed on a fair value basis
— | — | — | — | L&A to Banks | —
435 | — | (8) | — | L&A to Customers | 12
— | — | — | — | Reverse repurchase agreements non- trading | —
— | — | — | — | HTC (Amortised Cost) | —
— | 33 | — | (4) | Debt securities in issue | —
— | — | — | — | Subordinated liabilities and deposits by Banks | —
At 31 Dec 2024 | 13,584 | 33 | (2) | (4) |  | 99 | (3) |

1 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
2 The hedged risk ‘interest rate’ includes inflation risk.
Cash flow hedges
HSBC Continental Europe's cash flow hedging instruments consist principally of interest rate swaps and cross-currency swaps that are used to
manage the variability in future interest cash flows of non-trading financial assets and liabilities, arising due to changes in market interest rates
and foreign-currency basis.
HSBC Continental Europe applies macro cash flow hedging for interest-rate risk exposures on portfolios of replenishing current and forecasted
issuances of non-trading assets and liabilities that bear interest at variable rates, including rolling such instruments. The amounts and timing of
future cash flows, representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities on the basis of
their contractual terms and other relevant factors, including estimates of prepayments and defaults. The aggregate cash flows representing
both principal balances and interest cash flows across all portfolios are used to determine the effectiveness and ineffectiveness. Macro cash
flow hedges are considered to be dynamic hedges.

Hedging instrument by hedged risk
| Hedging Instrument | Hedged Item | Ineffectiveness
| Notional amount 1 | Carrying amount |  | Change in fair value 2 | Change in fair value 3 | Recognised in profit and loss | Profit and loss presentation
| Assets | Liabilities | Balance sheet presentation
Hedged Risk | €m | €m | €m | €m | €m | €m
Foreign currency | 252 | 36 | — | Derivatives | 6 | 6 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 27,881 | — | 2 | (126) | (122) | (4)
At 31 Dec 2025 | 28,133 | 36 | 2 |  | (120) | (116) | (4) |

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Notes on the consolidated financial statements

Hedging instrument by hedged risk (continued)
| Hedging Instrument | Hedged Item | Ineffectiveness
| Notional amount 1 | Carrying amount | Balance sheet presentation | Change in fair value 2 | Change in fair value 3 | Recognised in profit and loss | Profit and loss presentation
| Assets | Liabilities
Hedged Risk | €m | €m | €m | €m | €m | €m
Foreign currency | 261 | 9 | — | Derivatives | 2 | 2 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 26,659 | 1 | 3 | (104) | (113) | 9
At 31 Dec 2024 | 26,920 | 10 | 3 |  | (102) | (111) | 9 |

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at
the balance sheet date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
Sources of hedge ineffectiveness may arise from basis risk including, but not limited to timing differences between the hedged items and
hedging instruments, and hedges using instruments with a non-zero fair value.

Analysis of other comprehensive income by risk type
| Interest rate | Foreign Currency
| €m | €m
Cash flow hedging reserve at 1 Jan 2025 | 23 | —
Fair value gains/(losses) | (122) | 6
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of hedged items that has affected profit or loss | 9 | (6)
Income taxes | 28 | —
Others | — | —
Cash flow hedging reserve at 31 Dec 2025 | (62) | —

Cash flow hedging reserve at 1 Jan 2024 | (63) | —
Fair value gains/(losses) | (113) | 2
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of hedged items that has affected profit or loss | 230 | (2)
Income taxes | (31) | —
Others | — | —
Cash flow hedging reserve at 31 Dec 2024 | 23 | —

17 Financial investments

Carrying amount of financial investments
| 2025 | 2024
| €m | €m
Financial investments measured at fair value through other comprehensive income | 19,879 | 17,402
– treasury and other eligible bills | 2,416 | 893
– debt securities | 17,054 | 16,074
– equity securities | 46 | 27
– other instruments | 363 | 408
Debt instruments measured at amortised cost | 8,124 | 3,338
– debt securities | 8,124 | 3,338
At 31 Dec | 28,003 | 20,740

Equity instruments measured at fair value through other comprehensive income
| 2025 | 2024
| Fair value | Dividends recognised | Fair value | Dividends recognised
Type of equity instruments | €m | €m | €m | €m
Business facilitation | 28 | — | 11 | 1
Investments required by central institutions | 18 | — | 16 | —
At 31 Dec | 46 | — | 27 | 1

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
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Notes on the consolidated financial statements

18 Assets pledged, collateral received and assets transferred
Assets pledged 1

Financial assets pledged as collateral
| 2025 | 2024
| €m | €m
Treasury bills and other eligible securities | 2,246 | 1,231
Loans and advances to customers | 770 | 759
Debt securities | 18,257 | 12,967
Equity securities | 271 | 363
Other | 9,939 | 14,836
Assets pledged at 31 Dec | 31,483 | 30,156

The amount of assets pledged to secure liabilities may be greater than the book value of assets utilised as collateral. For example, in the case
of securitisations and covered bonds, the amount of liabilities issued, plus mandatory over-collateralisation, is less than the book value of the
pool of assets available for use as collateral. This is also the case where assets are placed with a custodian or a settlement agent that has a
floating charge over all the assets placed to secure any liabilities under settlement accounts.
These transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard
securities lending and borrowing, repurchase agreements and derivative margining.
HSBC Continental Europe places both cash and non-cash collateral in relation to derivative transactions.

Financial assets pledged as collateral that the counterparty has the right to sell or repledge
| 2025 | 2024
| €m | €m
Trading assets | 18,134 | 13,575
Financial investments | 1,808 | 224
At 31 Dec | 19,942 | 13,799

Collateral received 1
The fair value of financial assets accepted as collateral, relating primarily to standard securities lending, reverse repurchase agreements and
derivative margining, that HSBC Continental Europe is permitted to sell or repledge in the absence of default was EUR 85,689 million
at 31 December 2025 (EUR 61,419 million at 31 December 2024).
The fair value of any such collateral sold or repledged was EUR 55,902 million at 31 December 2025 (EUR 43,830 million at 31 December
2024). HSBC Continental Europe is obliged to return equivalent securities.
These transactions are conducted under terms that are usual and customary to standard securities lending, reverse repurchase agreements and
derivative margining.
Assets transferred 1
The assets pledged include transfers to third parties that do not qualify for derecognition, notably secured borrowings such as debt securities
held by counterparties as collateral under repurchase agreements and equity securities lent under securities lending agreements, as well as
swaps of equity and debt securities. For secured borrowings, the transferred asset collateral continues to be recognised in full and a related
liability, reflecting HSBC Continental Europe’s obligation to repurchase the assets for a fixed price at a future date is also recognised on the
balance sheet. Where securities are swapped, the transferred asset continues to be recognised in full. There is no associated liability as the
non-cash collateral received is not recognised on the balance sheet. HSBC Continental Europe is unable to use, sell or pledge the transferred
assets for the duration of these transactions, and remains exposed to interest rate risk and credit risk on these pledged assets. The
counterparty’s recourse is not limited to the transferred assets.

Transferred financial assets not qualifying for full derecognition and associated financial liabilities
| Carrying amount of:
| Transferred assets | Associated liabilities
| €m | €m
Repurchase agreements | 16,932 | 16,959
Securities lending agreements | 3,010 | 1
At 31 Dec 2025 | 19,942 | 16,960
Repurchase agreements | 10,834 | 10,837
Securities lending agreements | 2,965 | —
At 31 Dec 2024 | 13,799 | 10,837

1 Excludes assets classified as held for sale.

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Notes on the consolidated financial statements

19 Related information on foreign subsidiaries and branches country by
country
Related information on foreign subsidiaries and branches country by country required by the directive 2013/36/UE (‘CRD IV’) has been
transposed in article L. 511-45 of the French Monetary and Financial Code.

| At 31 Dec 2025
| Revenue (continuing operations)1 | Profit/(loss) Before Tax (continuing operations) | Current Tax (continuing operations) | Deferred Tax (continuing operations) | Public subsidies received | Number of employees (Full Time Equivalent)
| €m | €m | €m | €m | €m
HSBC Continental Europe | 3,683 | 725 | (286) | 222 | — | 6,101
– France | 1,548 | 39 | (51) | 172 | — | 2,453
– Germany | 1,105 | 135 | (101) | 41 | — | 1,969
– Malta | 222 | 109 | (37) | (1) | — | 865
– Ireland | 177 | 138 | (20) | — | — | 110
– Luxembourg | 170 | 81 | (19) | — | — | 197
– Netherlands | 144 | 114 | (30) | — | — | 63
– Poland | 88 | 60 | (13) | 2 | — | 62
– Spain | 75 | 26 | (8) | — | — | 91
– Italy | 42 | 6 | (1) | — | — | 59
– Belgium | 23 | 11 | (3) | — | — | 20
– Czech Republic | 22 | 9 | (2) | — | — | 48
– Sweden | 11 | 3 | — | — | — | 21
– Greece | — | (2) | — | — | — | —
– Others 2 | 56 | (4) | (1) | 8 | — | 143

| At 31 Dec 2024 3
HSBC Continental Europe | 3,547 | 1,138 | (179) | (227) | — | 6,739
– France | 1,478 | 317 | 32 | (231) | — | 2,837
– Germany | 986 | 196 | (73) | 14 | — | 2,155
– Malta | 263 | 163 | (49) | (6) | — | 860
– Ireland | 177 | 135 | (16) | — | — | 112
– Luxembourg | 171 | 73 | (17) | — | — | 205
– Netherlands | 135 | 108 | (28) | — | — | 71
– Poland | 94 | 67 | (12) | — | — | 92
– Spain | 75 | 43 | (2) | (8) | — | 101
– Italy | 50 | 18 | (5) | — | — | 61
– Belgium | 27 | 15 | (5) | — | — | 21
– Czech Republic | 27 | 13 | (3) | — | — | 48
– Sweden | 9 | 2 | — | — | — | 22
– Greece | — | — | — | — | — | —
– Others 2 | 55 | (12) | (1) | 4 | — | 154

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 Others include HSBC Private Bank (Luxembourg) S.A. post its acquisition on 2 November 2023.
3 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
The list of subsidiaries by country detailing the names of entities, nature of activity and geographical location, is presented in the Note 36 on
pages 256 to 257. The addresses of main locations abroad are presented on page 307.

20 Structured entities
Consolidated structured entities by HSBC Continental Europe

Total assets of HSBC Continental Europe’s consolidated structured entities, split by entity type
| Conduits | Securitisations | HSBC managed funds | Other | Total
| €m | €m | €m | €m | €m
At 31 Dec 2025 | — | — | 134 | 227 | 361
At 31 Dec 2024 | — | — | 5,028 | 509 | 5,537

General policy
A structured entity is an entity designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, for
example when any voting rights relate to administrative tasks only, and key activities are directed by contractual arrangements. Thus, these
entities have a limited scope of activities and a well-defined purpose.
Structured entities are assessed for consolidation in accordance with the accounting policy set out in Note 1.

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Notes on the consolidated financial statements

HSBC Continental Europe is involved directly or indirectly with structured entities mainly through securitisation of financial assets, conduits and
investment funds.
Group arrangements that involve structured entities are authorised centrally when they are established to ensure appropriate purpose and
governance. The activities of structured entities administered by HSBC Continental Europe are closely monitored by senior management. HSBC
Continental Europe has involvement with both consolidated and unconsolidated structured entities, which may be established by the HSBC
Group or by a third party, detailed below.
Securitisations
HSBC Continental Europe has interests in consolidated securitisation vehicles through holding notes issued by these entities.
HSBC managed funds
HSBC Continental Europe together with other HSBC entities has established and managed a number of money market and non-money market
investment funds in order to offer its customer investment opportunities. Where it is deemed to be acting as principal rather than agent in its
role as investment manager, HSBC Continental Europe will control and hence consolidate these funds.
HSBC Continental Europe, as fund manager, may be entitled to receive management and performance fees based on the assets under
management. HSBC Continental Europe may also retain units in these funds.
Non-HSBC managed funds
HSBC Continental Europe purchases and holds units of third party managed funds in order to facilitate business and meet customer needs.
HSBC Continental Europe sponsored structured entities
The amount of assets transferred to and income received from such sponsored entities during 2025 and 2024 was not significant.
Others
HSBC Continental Europe also enters into a number of transactions in the normal course of business, including asset and structured finance
transactions where it has control of the structured entity.
Unconsolidated structured entities by HSBC Continental Europe
The term ‘unconsolidated structured entities’ refers to all structured entities that are not controlled by the HSBC Group. It includes interests in
structured entities that are not consolidated. The HSBC Group enters into transactions with unconsolidated structured entities in the normal
course of business to facilitate customer transactions and for specific investment opportunities.
The table below shows the total assets of unconsolidated structured entities in which the HSBC Group has an interest at the reporting date, as
well as the HSBC Group’s maximum exposure to loss in relation to those interests.

Nature and risks associated with HSBC Continental Europe interests in unconsolidated structured entities
| Securitisations | HSBC managed funds | Non-HSBC managed funds | Other | Total
Total asset values of the entities (€m) |  |  |  |  |
0 – 500 | — | 46 | 14 | 4 | 64
500 – 2,000 | — | 3 | 17 | — | 20
2,000 – 5,000 | — | 6 | 7 | — | 13
5,000 – 25,000 | — | 4 | 6 | — | 10
25,000+ | — | 2 | 2 | — | 4
Number of entities at 31 Dec 2025 | — | 61 | 46 | 4 | 111
| €m | €m | €m | €m | €m
Total assets in relation to HSBC Continental Europe's interests in the unconsolidated structured entities | — | 270 | 232 | 5 | 507
– trading assets | — | 1 | — | — | 1
– financial assets designated and otherwise mandatorily measured at fair value | — | 257 | 231 | — | 488
– financial investments | — | 12 | 1 | 5 | 18
Total liabilities in relation to HSBC Continental Europe’s interests in the unconsolidated structured entities | — | 3 | 1 | — | 4
HSBC Continental Europe's maximum exposure at 31 Dec 2025 | — | 267 | 231 | 5 | 503
Total asset values of the entities (€m) |  |  |  |  |
0 – 500 | — | 101 | 128 | 3 | 232
500 – 2,000 | — | 18 | 68 | — | 86
2,000 – 5,000 | — | 8 | 35 | — | 43
5,000 – 25,000 | — | 5 | 17 | — | 22
25,000+ | — | 1 | 2 | — | 3
Number of entities at 31 Dec 2024 1 | — | 133 | 250 | 3 | 386

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Notes on the consolidated financial statements

Nature and risks associated with HSBC Continental Europe interests in unconsolidated structured entities (continued)
| Securitisations | HSBC managed funds | Non-HSBC managed funds 1 | Other | Total
| €m | €m | €m | €m | €m
Total assets in relation to HSBC Continental Europe's interests in the unconsolidated structured entities 1 | — | 4,139 | 2,081 | — | 6,220
– trading assets | — | 1 | — | — | 1
– financial assets designated and otherwise mandatorily measured at fair value 1 | — | 248 | 222 |  | 470
– financial investment | — | 6 | — | — | 6
– assets held for sale 2 | — | 3,884 | 1,859 | — | 5,743
Total liabilities in relation to HSBC Continental Europe’s interests in the unconsolidated structured entities | — | 7 | — | — | 7
HSBC Continental Europe's maximum exposure at 31 Dec 2024 1 | — | 4,132 | 2,081 | — | 6,213

1 Following the identification of an error relating the structured entities, the comparative figures as at 31 December 2024 have been restated. The impact is on
non-HSBC managed funds, resulting in an increase in number of non-HSBC managed funds by 43. Additionally, total assets associated with HSBC Continental
Europe’s interests in unconsolidated structured entities, as reported under financial assets designated and otherwise mandatorily measured at fair value,
increased by EUR 208 million.
2 The assets held for sale in 2024 represent the disposal group associated with the planned sale of the life insurance business in France, which was completed on
31 October 2025.
The maximum exposure to loss from HSBC Continental Europe’s interests in unconsolidated structured entities represents the maximum loss
it could incur as a result of its involvement with unconsolidated structured entities regardless of the probability of the loss being incurred.
– For commitments and guarantees, and written credit default swaps, the maximum exposure of HSBC Continental Europe to loss is the notional
amount of potential future losses.
– For retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure of HSBC Continental Europe
loss is the carrying value of these interests at the balance sheet reporting date.
The maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements entered into to mitigate HSBC Continental
Europe’s exposure to loss.

21 Goodwill and intangible assets

| 2025 | 2024
| €m | €m
Goodwill | 64 | 66
Other intangible assets | 255 | 153
At 31 Dec | 319 | 219

Goodwill

Movement analysis of goodwill
| 2025 | 2024
| €m | €m
Gross amount |  |
At 1 Jan | 358 | 441
Amount written off 1 | (12) | (83)
At 31 Dec | 346 | 358
Accumulated impairment losses |  |
At 1 Jan | (292) | (375)
Impairment charge for the year | (2) | —
Amount written off 1 | 12 | 83
At 31 Dec | (282) | (292)
Net carrying amount at 31 Dec | 64 | 66

1 In 2025, EUR 10 million of goodwill was written off following the sale of private banking operations in Germany and EUR 2 million following the closure of Asset
Management France ('AMFR') Spanish Branch. In 2024,EUR 83 million of goodwill was written off following the sale of retail operations in France.
Impairment testing
During 2025, impairment testing was performed and EUR 2 million of impairment was recognised on Asset Management goodwill, which was
subsequently written off following the closure of Asset Management France ('AMFR') Spanish Branch.

Impairment results and key assumptions in VIU calculation
| Carrying amount at 31 Dec 2025 | of which goodwill | Value in use at 31 Dec 2025 | Discount rate | Growth rate beyond initial cash flow projections | Carrying amount at 31 Dec 2024 | of which goodwill | Value in use at 31 Dec 2024 | Discount rate | Growth rate beyond initial cash flow projections
| €m | €m | €m | % | % | €m | €m | €m | % | %
Asset Management | 152 | 64 | 324 | 10.6 | 1.9 | 147 | 66 | 317 | 10.9 | 1.9

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Notes on the consolidated financial statements

Sensitivities of key assumptions in calculating VIU
Given the extent by which VIU exceeds carrying amount, the Asset Management France (‘AMFR’) within IWPB CGU was not sensitive to
reasonably possible adverse changes in key assumptions supporting the recoverable amount, as detailed under Impairment of goodwill and
other non-financial assets in Note 1.2 Summary of Material Accounting Policies. In making an estimate of reasonably possible changes to
assumptions, management considers the available evidence in respect of each input to the VIU calculation, such as the external range of
discount rates observable, historical performance against forecast, and risks attaching to the key assumptions underlying cash flow projections.
Other intangible assets
Other intangible assets include purchased and internally generated software. The cost of internally generated software comprises all directly
attributable costs necessary to create, produce and prepare the software to be capable of operating in the manner intended by management.
Costs incurred in the ongoing maintenance of software are expensed immediately as incurred.
Intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount may
not be recoverable. Where intangible assets have a finite useful life, they are stated at cost less amortisation and accumulated impairment losses
and are amortised over their estimated useful lives. Estimated useful life is the lower of legal duration and expected useful life.
Intangible assets with finite useful lives are amortised, generally on a straight-line basis, over their useful lives as follows:
– Internally generated software between 3 and 10 years
– Purchased software between 3 and 10 years
– Other generally 10 years.

The analysis of intangible assets movements at 31 December is as follows:
| Internally generated software | Purchased software | Other | Total
| €m | €m | €m | €m
Cost |  |  |  |
At 1 Jan 2025 | 616 | 100 | 1 | 717
Additions | 170 | 6 | — | 176
Disposals | (9) | — | — | (9)
Amount written off | (5) | (2) | — | (7)
Reclassified as held for sale 1 | (10) | — | — | (10)
Other changes | 1 | — | (1) | —
At 31 Dec 2025 | 763 | 104 | — | 867
Accumulated amortisation and impairment |  |  |  |
At 1 Jan 2025 | (472) | (92) | — | (564)
Amortisation charge for the year | (192) | (10) | (1) | (203)
Impairment charge for the year | (89) | (5) | — | (94)
Reversal of Impairment | 215 | 8 | — | 223
Amount written off | 5 | 2 | — | 7
Disposals | 9 | — | — | 9
Reclassified as held for sale 1 | 10 | — | — | 10
Other changes | (1) | — | 1 | —
At 31 Dec 2025 | (515) | (97) | — | (612)
Net carrying amount at 31 Dec 2025 | 248 | 7 | — | 255
Cost |  |  |  |
At 1 Jan 2024 | 446 | 115 | 13 | 574
Additions 2 | 219 | 5 | — | 224
Disposals | (1) | — | — | (1)
Amount written off | (44) | (12) | (12) | (68)
Reclassified as held for sale 1 | — | (5) | — | (5)
Other changes | (4) | (3) | — | (7)
At 31 Dec 2024 2 | 616 | 100 | 1 | 717
Accumulated amortisation and impairment |  |  |  | —
At 1 Jan 2024 | (328) | (112) | (12) | (452)
Amortisation charge for the year | (30) | — | — | (30)
Impairment charge for the year 2 | (157) | — | — | (157)
Reversal of Impairment | — | — | — | —
Amount written off | 44 | 12 | 12 | 68
Disposals | — | — | — | —
Reclassified as held for sale 1 | — | 5 | — | 5
Other changes | (1) | 3 | — | 2
At 31 Dec 2024 2 | (472) | (92) | — | (564)
Net carrying amount at 31 Dec 2024 | 144 | 8 | 1 | 153

1 Amounts reclassified as held for sale in 2025 correspond to assets of the fund administration services in Germany, whereas in 2024 they relate to assets of the
insurance business in France.
2 The comparatives have been represented to reflect capitalisation of the internally generated software with carrying amount of EUR 154 million and accumulated
impairment of EUR 154 million, which was previously expensed in the income statement.

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Notes on the consolidated financial statements

Impairment testing
During 2025, impairment testing performed resulted in recognition of EUR 94 million of impairment. This included a EUR 64 million impairment
in Germany following the announced sale of the custody and fund administration business and EUR 24 million in Malta after the announcement
of the sale of HSBC Continental Europe's majority shareholding in HSBC Malta.
Furthermore, with effect from 1 January 2025, the revised operating segment structure in HSBC Continental Europe resulted in a EUR 223
million reversal of previously recognized impairment on intangible asset, offset by EUR 127 million amortization catch-up within the CIB
business in France including EEA branches.

22 Prepayments, accrued income and other assets

| 2025 | 2024
| €m | €m
Cash collateral and margin receivables | 9,007 | 14,128
Settlement accounts and items in course of collection from other banks | 1,253 | 1,193
Prepayments and accrued income | 1,137 | 1,089
Bullion | — | 3
Property plant and equipment | 107 | 134
Right of use assets 1 | 110 | 131
Reinsurance contract assets (Note 5) | 4 | 3
Employee benefit assets (Note 6) | 111 | 66
Endorsements and acceptances | — | 1
Other accounts | 955 | 1,250
At 31 Dec | 12,684 | 17,998

1 The net value of the right of use breaks down into EUR 421 million as gross value (2024: EUR 388 million) and EUR (311) million as depreciation and provisions
(2024: EUR (257) million).
Prepayments, accrued income and other assets include EUR 11,980 million (2024: EUR 17,165 million) of financial assets, the majority of which
are measured at amortised cost.
Property, plant and equipment
Land and buildings are stated at historical cost, or fair value at the date of transition to IFRS, less any impairment losses and depreciation
calculated as per below:
– freehold land is not depreciated;
– acquisition-related expenses on buildings are expensed in the year in which they occur, same as preliminary costs; and
– depreciation of buildings is calculated over their estimated useful lives, which are generally between 25 to 75 years.
Equipment, fixtures and fittings (including equipment on operating leases where HSBC Continental Europe is the lessor) are stated at cost less
impairment losses and depreciation is calculated on a straight-line basis to write off the assets over their estimated useful lives, which are
generally between 5 to 25 years. HSBC Continental Europe holds certain properties as investments to earn rentals or for capital appreciation, or
both. Investment properties are included in the balance sheet at fair value with changes in fair value recognised in the income statement in the
period of change. Fair values are determined by independent professional valuers who apply recognised valuation techniques. Property, plant
and equipment is subject to review for impairment if there are events or changes in circumstances that indicate that the carrying amount may
not be recoverable.

| Freehold land and buildings 1 | Equipment, fixtures and fittings | Total
| €m | €m | €m
Cost or fair value |  |  |
At 1 Jan 2025 | 63 | 424 | 487
Additions at cost | 3 | 16 | 19
Fair value adjustments | — | — | —
Disposals | — | (5) | (5)
Transfers | — | — | —
Other changes | (6) | (5) | (11)
Reclassified as held for sale | — | — | —
At 31 Dec 2025 | 60 | 430 | 490
Accumulated depreciation |  |  |
At 1 Jan 2025 | (24) | (329) | (353)
Depreciation charge for the year | (1) | (35) | (36)
Disposals | — | 5 | 5
Transfers | — | — | —
Impairment loss recognised | — | (31) | (31)
Reversal on impairment | 2 | 19 | 21
Other changes | 6 | 5 | 11
Reclassified as held for sale | — | — | —
At 31 Dec 2025 | (17) | (366) | (383)
Net book value at 31 Dec 2025 | 43 | 64 | 107

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
246

Notes on the consolidated financial statements

| Freehold land and buildings 1 | Equipment, fixtures and fittings | Total
| €m | €m | €m
Cost or fair value |  |  |
At 1 Jan 2024 | 792 | 448 | 1,240
Additions at cost | 3 | 20 | 23
Fair value adjustments | (65) | — | (65)
Disposals | (6) | (40) | (46)
Transfers | — | — | —
Other changes | — | — | —
Reclassified as held for sale 2 | (661) | (4) | (665)
At 31 Dec 2024 | 63 | 424 | 487
Accumulated depreciation |  |  |
At 1 Jan 2024 | (27) | (351) | (378)
Depreciation charge for the year | — | (27) | (27)
Disposals | 3 | 39 | 42
Transfers | — | — | —
Impairment loss recognised | — | (4) | (4)
Reversal on impairment | — | 10 | 10
Other changes | — | — | —
Reclassified as held for sale 2 | — | 4 | 4
At 31 Dec 2024 | (24) | (329) | (353)
Net book value at 31 Dec 2024 | 39 | 95 | 134

1 Includes EUR 8 million of leasehold land and building for which the rights of use are considered sufficient to constitute control and for which there are
insignificant lease liabilities (2024: EUR 13 million). They are therefore presented as owned assets.
2 Represents reclassification to held for sale related to HSBC Assurances Vie (France) in the fourth quarter of 2024.
Impairment Testing
Impairment of non-financial assets, including tangible assets and right-of-use assets is assessed in line with our policy outlined in Note 1.2(b).
This involves comparing the net carrying value of Cash Generating Units (CGUs) to their recoverable amounts.
During 2025, impairment testing performed resulted in the recognition of EUR 31 million of impairment on tangible assets and EUR 28 million
of impairment on right of use assets. This included EUR 18 million impairment on tangible assets, EUR 23 million impairment on right of use
assets in Germany following the announcement of the sale of the custody and fund administration business and EUR 13 million impairment on
tangible assets, EUR 3 million impairment on right of use assets in Malta after the announcement of the sale of HSBC Continental Europe's
majority shareholding in HSBC Malta.
Furthermore, with effect from 1 January 2025, the revised operating segment structure in HSBC Continental Europe resulted in EUR 21 million
reversal of previously recognized impairment on tangible assets, offset by EUR 12 million depreciation catch-up and EUR 26 million of reversal
of impairment on right of use assets, offset by EUR 14 million depreciation catch-up within the CIB business in France including EEA branches.

23 Trading liabilities

| 2025 | 2024
| €m | €m
Deposits by banks 1 | 1 | —
Customer accounts 1 | — | 1
Other debt securities in issue | — | —
Other liabilities – net short positions in securities | 18,375 | 16,479
At 31 Dec | 18,376 | 16,480

1'Deposits by banks' and 'Customer accounts' include repos, stock lending and other amounts.

24 Financial liabilities designated at fair value

| 2025 | 2024
| €m | €m
Deposits by banks and customer accounts | 129 | 58
Liabilities to customers under investment contracts | 166 | 168
Debt securities in issue | 10,791 | 9,680
At 31 Dec | 11,086 | 9,906

At 31 December 2025 the carrying amount of financial liabilities designated at fair value was EUR (130) million lower than the contractual
amount at maturity (at 31 December 2024: EUR (356) million lower). At 31 December 2025, the cumulative amount of change in fair value
attributable to changes in credit risk was EUR 32 million (at 31 December 2024: EUR (72) million). In 2025, HSBC Continental Europe
recognised a variation of EUR (112) million in other comprehensive income in respect of HSBC Continental Europe's own credit risk
(at 31 December 2024: EUR (26) million).

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
247

Notes on the consolidated financial statements

25 Accruals, deferred income and other liabilities

| 2025 | 2024
| €m | €m
Cash collateral and margin payables | 17,406 | 13,528
Settlement accounts and items in the course of transmission to other banks | 1,031 | 1,247
Accruals and deferred income | 1,127 | 1,137
Lease liabilities | 166 | 174
Employee benefit liabilities (Note 6) | 63 | 75
Endorsements and acceptances | — | 1
Reinsurance contract liabilities | 4 | —
Other liabilities | 1,424 | 1,686
At 31 Dec | 21,221 | 17,848

At 31 December 2025 Accruals, deferred income and other liabilities include EUR 20,862 million (at 31 December 2024: EUR 17,052 million), of
financial liabilities, the majority of which are measured at amortised cost.

26 Provisions

| Restructuring costs 1 | Legal proceedings and regulatory matters | Customer remediation | Other provisions | Total
| €m | €m | €m | €m | €m
Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2025 | 21 | 7 | 4 | 82 | 114
Additions | 292 | 5 | 1 | 19 | 317
Amounts utilised | (27) | (2) | (1) | (16) | (46)
Unused amounts reversed | (2) | (1) | (3) | (2) | (8)
Exchange and other movements | — | 1 | — | (6) | (5)
At 31 Dec 2025 | 284 | 10 | 1 | 77 | 372
Contractual commitments 2 |  |  |  |  |
At 1 Jan 2025 |  |  |  |  | 70
Net change in expected credit loss provisions and other movements |  |  |  |  | 2
At 31 Dec 2025 |  |  |  |  | 72
Total provisions |  |  |  |  |
At 31 Dec 2024 |  |  |  |  | 184
At 31 Dec 2025 |  |  |  |  | 444

1 Includes restructuring provision of EUR 292 million (primarily in France EUR 155 million and Germany EUR 113 million).Further details of the provision are
disclosed in section 'Significant events during the year' within Note 1 on pag e 211.
2 The contractual commitments provision includes off-balance sheet loan commitments and guarantees, for which expected credit losses are provided under
IFRS 9. Further analysis of the movement in the expected credit loss is disclosed within the 'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including loan commitments and financial guarantees' table under section ‘Credit Risk’.

| Restructuring costs | Legal proceedings and regulatory matters | Customer remediation | Other provisions | Total
| €m | €m | €m | €m | €m
Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2024 | 78 | 10 | 4 | 95 | 187
Additions | 3 | 3 | 1 | 22 | 29
Amounts utilised | (43) | (3) | — | (53) | (99)
Unused amounts reversed | (16) | (3) | (1) | (14) | (34)
Exchange and other movements | (1) | — | — | 32 | 31
At 31 Dec 2024 | 21 | 7 | 4 | 82 | 114
Contractual commitments 1 |  |  |  |  |
At 1 Jan 2024 |  |  |  |  | 58
Net change in expected credit loss provisions and other movements |  |  |  |  | 12
At 31 Dec 2024 |  |  |  |  | 70
Total provisions |  |  |  |  |
At 31 Dec 2023 |  |  |  |  | 245
At 31 Dec 2024 |  |  |  |  | 184

1 The contractual commitments provision includes off-balance sheet loan commitments and guarantees, for which expected credit losses are provided under
IFRS 9. Further analysis of the movement in the expected credit loss is disclosed within the 'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including loan commitments and financial guarantees' table under section ‘Credit Risk’.
u Further details of ‘Legal proceedings and regulatory matters’ regarding the HSBC Group entities are set out in Note 33.

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
248

Notes on the consolidated financial statements

27 Subordinated liabilities
Subordinated liabilities are initially measured at fair value, which is the consideration received net of directly attributable transaction costs
incurred. Subsequent measurement is at amortised cost, using the effective interest rate method to amortise the difference between proceeds
net of directly attributable transaction costs and the redemption amount over the expected life of the debt, unless the instruments are
designated at fair value.

| 2025 | 2024
| €m | €m
At amortised cost | 1,894 | 1,941
Total at 31 Dec | 1,894 | 1,941

|  | Book value
|  | 2025 | 2024
|  | €m | €m
Tier 2 instruments issued by HSBC Continental Europe and its subsidiaries |  |
EUR 16 million | Undated subordinated variable rate notes | — | 16
EUR 500 million | Floating rate Subordinated Loan maturing 2030 | — | 500
EUR 10 million | 4.21% Subordinated Loan maturing 2025 | — | 10
EUR 5 million | 4.21% Subordinated Loan maturing 2025 | — | 5
EUR 10 million | 5.50% Subordinated Loan maturing 2028 | — | 10
EUR 200 million | Floating Rate Subordinated Loan maturing 2034 | 200 | 200
EUR 400 million | Floating Rate Subordinated Loan maturing 2035 | 399 | 400
EUR 300 million | Floating Rate Subordinated Loan maturing 2035 | 299 | 300
EUR 500 million | Floating Rate Subordinated Loan maturing 2036 | 498 | 500
EUR 500 million | Floating Rate Subordinated Loan maturing 2036 | 498 | —
At 31 Dec |  | 1,894 | 1,941

28 Maturity analysis of financial assets, liabilities and off-balance sheet
commitments
Contractual maturity of financial liabilities
The balances in the table below do not agree directly with those in the consolidated balance sheet as the table incorporates, on an
undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities and derivatives not treated as
hedging derivatives).
Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual maturities. Trading
liabilities and derivatives not treated as hedging derivatives are included in the 'On demand' time bucket and not by contractual maturity.
In addition, loans and other credit-related commitments, financial guarantees and similar contracts are generally not recognised on the balance
sheet. The undiscounted cash flows potentially payable under financial guarantees and similar contracts are classified on the basis of the
earliest date they can be called.

Distribution of cash flows payable by maturity
| 2025
| Due not more than 1 month | Due over 1 month but not over 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
| €m | €m | €m | €m | €m | €m
Deposits by banks | 12,994 | 70 | 398 | 805 | 372 | 14,639
Customer accounts | 86,425 | 5,509 | 5,141 | 40 | 114 | 97,229
Repurchase Agreements – non–trading | 13,031 | 1,288 | 220 | — | — | 14,539
Trading liabilities | 18,376 | — | — | — | — | 18,376
Financial liabilities designated at fair value | 553 | 563 | 2,446 | 4,278 | 3,974 | 11,814
Derivatives | 33,061 | — | — | 82 | 35 | 33,178
Debt securities in issue | 2,191 | 1,485 | 2,635 | 7,227 | 1,300 | 14,838
Subordinated liabilities | — | — | — | 973 | 1,114 | 2,087
Other financial liabilities | 19,666 | 109 | 331 | 143 | 26 | 20,275
Liabilities of disposal groups held for sale 1 | 10,625 | — | — | — | — | 10,625
Sub Total | 196,922 | 9,024 | 11,171 | 13,548 | 6,935 | 237,600
Loan and other credit-related commitments | 126,976 | — | — | — | — | 126,976
Financial guarantees 2 | 1,863 | — | — | — | — | 1,863
Total at 31 Dec 2025 | 325,761 | 9,024 | 11,171 | 13,548 | 6,935 | 366,439
Proportion of cash flows payable in period (%) | 89 | 2 | 3 | 4 | 2 |

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
249

Notes on the consolidated financial statements

Distribution of cash flows payable by maturity (continued)
| 2024
| Due not more than 1 month | Due over 1 month but not over 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
| €m | €m | €m | €m | €m | €m
Deposits by banks | 10,284 | 58 | 242 | 979 | 382 | 11,945
Customer accounts | 89,069 | 4,502 | 3,166 | 378 | 107 | 97,222
Repurchase Agreements – non–trading | 11,262 | 823 | 303 | — | — | 12,388
Trading liabilities | 16,480 | — | — | — | — | 16,480
Financial liabilities designated at fair value 3 | 346 | 591 | 2,278 | 3,869 | 3,569 | 10,653
Derivatives | 41,791 | — | — | 40 | 26 | 41,857
Debt securities in issue | 878 | 1,451 | 4,072 | 6,253 | 3,863 | 16,517
Subordinated liabilities | — | — | 522 | 240 | 1,422 | 2,184
Other financial liabilities | 16,220 | 102 | 304 | 136 | 27 | 16,789
Liabilities of disposal groups held for sale 1 | 2,037 | 124 | 111 | — | 1,396 | 3,668
Sub Total | 188,367 | 7,651 | 10,998 | 11,895 | 10,792 | 229,703
Loan and other credit-related commitments | 110,820 | — | — | — | — | 110,820
Financial guarantees 2 | 1,950 | — | — | — | — | 1,950
Total at 31 Dec 2024 | 301,137 | 7,651 | 10,998 | 11,895 | 10,792 | 342,473
Proportion of cash flows payable in period (%) | 88 | 2 | 3 | 4 | 3 |

1 The 2025 liabilities held for sale include disposal group related to the planned sale of custody business in Germany. The 2024 liabilities held for sale include
disposal group related to the planned sale of the life insurance business in France and the private banking business in Germany.
2 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
3 Following the identification of a maturity classification error, the comparative figures as at 31 December 2024 have been restated. An amount of EUR 1.5 billion
previously classified under ‘Due between 1 and 5 years’ has been reallocated as follows: EUR 901 million to ‘Due between 3 and 12 months’, EUR 362 million
to ‘Due after 5 years', EUR 163 million to ‘Due over 1 month but not over 3 months’ and EUR 41 million to ‘Due not more than 1 month'.
Maturity analysis of financial assets and liabilities
The following tables provides an analysis of financial assets and liabilities by residual contractual maturity at the balance sheet date. These
balances are included in the maturity analysis as follows:
– trading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the
‘Due within 1 year’ time bucket, because trading balances are typically held for short periods of time;
– financial assets and liabilities with no contractual maturity (such as equity securities) are included in the ‘Due after more than 1 year’ time
bucket. Undated or perpetual instruments are classified based on the contractual notice period which the counterparty of the instrument is
entitled to give. Where there is no contractual notice period, undated or perpetual contracts are included in the ‘Due after more than 1 year’
time bucket;
– financial instruments included within assets and liabilities of disposal groups held for sale are classified on the basis of the contractual maturity
of the underlying instruments and not on the basis of the disposal transaction; and
– liabilities under investment contracts are classified in accordance with their contractual maturity. Undated investment contracts are included in
the ‘Due after more than 1 year’ time bucket, however, such contracts are subject to surrender and transfer options by the policyholders.

Maturity analysis of financial assets and financial liabilities |  |  |
| 2025 | 2024
| Due within 1 year | Due after more than 1 year | Total | Due within 1 year | Due after more than 1 year | Total
| €m | €m | €m | €m | €m | €m
Financial assets |  |  |  |  |  |
Cash and balances at central banks | 58,092 | — | 58,092 | 48,907 | — | 48,907
Trading assets | 30,733 | 68 | 30,801 | 22,840 | 13 | 22,853
Financial assets designated or otherwise mandatorily measured at fair value | 660 | 959 | 1,619 | 561 | 1,002 | 1,563
Derivatives | 40,537 | 42 | 40,579 | 43,162 | 89 | 43,251
Loans and advances to banks | 5,633 | 82 | 5,715 | 5,460 | 243 | 5,703
Loans and advances to customers | 19,778 | 23,057 | 42,835 | 18,058 | 33,230 | 51,288
Reverse repurchase agreements – non-trading | 28,283 | 1,025 | 29,308 | 25,647 | 117 | 25,764
Financial investments | 6,177 | 21,826 | 28,003 | 3,863 | 16,877 | 20,740
Assets held for sale 1 | 303 | 48 | 351 | 3,578 | 21,168 | 24,746
Other financial assets | 11,467 | 512 | 11,979 | 17,000 | 349 | 17,349
Total at 31 Dec | 201,663 | 47,619 | 249,282 | 189,076 | 73,088 | 262,164

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
250

Notes on the consolidated financial statements

Maturity analysis of financial assets and financial liabilities (continued) |  |  |
| 2025 | 2024
| Due within 1 year | Due after more than 1 year | Total | Due within 1 year | Due after more than 1 year | Total
| €m | €m | €m | €m | €m | €m
Financial liabilities |  |  |  |  |  |
Deposits by banks | 13,443 | 1,071 | 14,514 | 10,564 | 1,256 | 11,820
Customer accounts | 96,953 | 154 | 97,107 | 96,609 | 456 | 97,065
Repurchase agreements – non-trading | 14,486 | — | 14,486 | 12,344 | — | 12,344
Trading liabilities | 18,376 | — | 18,376 | 16,480 | — | 16,480
Financial liabilities designated at fair value 2 | 3,526 | 7,560 | 11,086 | 3,061 | 6,845 | 9,906
Derivatives | 33,061 | 117 | 33,178 | 41,791 | 66 | 41,857
Debt securities in issue | 6,303 | 7,826 | 14,129 | 6,398 | 8,859 | 15,257
Liabilities of disposal groups held for sale 1 | 10,627 | 4 | 10,631 | 2,279 | 1,398 | 3,677
Other financial liabilities | 20,520 | 340 | 20,860 | 17,104 | 315 | 17,419
Subordinated liabilities | — | 1,894 | 1,894 | 515 | 1,426 | 1,941
Total at 31 Dec | 217,295 | 18,966 | 236,261 | 207,145 | 20,621 | 227,766

1 The 2025 assets and liabilities held for sale include disposal group related to the planned sale of custody business in Germany. The 2024 assets and liabilities
held for sale include disposal group related to the planned sale of the life insurance business in France and the private banking business in Germany.
2 Following the identification of a maturity classification error, the comparative figures as at 31 December 2024 have been restated. An amount of EUR 1.1 billion
previously classified under ‘Due after more than 1 year’ has been reallocated to 'Due within 1 year'.
u Further information regarding HSBC Continental Europe’s liquidity and funding management is available in the Risk Management section page 168 and
following.

29 Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously (‘the
offset criteria’).
In the following table, the ‘Amounts not set off in the balance sheet’ include transactions where:
– the counterparty has an offsetting exposure with HSBC Continental Europe and a master netting or similar arrangement is in place with a right
of set off only in the event of default, insolvency or bankruptcy, or the offset criteria are not otherwise satisfied; and
– in the case of derivatives, reverse repurchase/repurchase, stock borrowing/lending and similar agreements, cash and non-cash collateral (debt
securities and equities) has been received/pledged to cover net exposure in the event of a default or other predetermined events.
The effect of over-collateralisation is excluded.
'Amounts not subject to enforceable master netting agreements’ include contracts executed in jurisdictions where the rights of set off may not
be upheld under the local bankruptcy laws, and transactions where a legal opinion evidencing enforceability of the right of offset may not have
been sought, or may have been unable to obtain.

Offsetting of financial assets and financial liabilities |  |
| Amounts subject to enforceable netting arrangements | Amounts not subject to enforceable netting arrangements 3 | Total
| Gross amounts | Amounts offset | Net amounts in the balance sheet | Amounts not offset in the balance sheet | Net amount
Financial Instruments including non- cash collateral | Cash collateral
| €m | €m | €m | €m | €m | €m | €m | €m
Financial assets |  |  |  |  |  |  |  |
Derivatives (Note 16)1 | 53,485 | (13,542) | 39,943 | (24,636) | (15,047) | 260 | 636 | 40,579
Reverse repos, stock borrowing and similar agreements classified as:2 | 85,357 | (55,936) | 29,421 | (29,338) | (83) | — | 186 | 29,607
– trading assets | 113 | — | 113 | (113) | — | — | 186 | 299
– non-trading assets | 85,244 | (55,936) | 29,308 | (29,225) | (83) | — | — | 29,308
At 31 Dec 2025 | 138,842 | (69,478) | 69,364 | (53,974) | (15,130) | 260 | 822 | 70,186
Derivatives (Note 16)1 | 55,491 | (14,839) | 40,652 | (30,260) | (9,785) | 607 | 2,599 | 43,251
Reverse repos, stock borrowing and similar agreements classified as:2 | 62,970 | (37,167) | 25,803 | (25,587) | (216) | — | 186 | 25,989
– trading assets | 39 | — | 39 | (39) | — | — | 186 | 225
– non-trading assets | 62,931 | (37,167) | 25,764 | (25,548) | (216) | — | — | 25,764
At 31 Dec 2024 | 118,461 | (52,006) | 66,455 | (55,847) | (10,001) | 607 | 2,785 | 69,240

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
251

Notes on the consolidated financial statements

Offsetting of financial assets and financial liabilities (continued) |  |
| Amounts subject to enforceable netting arrangements | Amounts not subject to enforceable netting arrangements 3 | Total
| Gross amounts | Amounts offset | Net amounts in the balance sheet | Amounts not offset in the balance sheet | Net amount
| Financial Instruments including non- cash collateral | Cash collateral
| €m | €m | €m | €m | €m | €m | €m | €m
Financial Liabilities |  |  |  |  |  |  |  |
Derivatives (Note 16)1 | 45,687 | (13,542) | 32,145 | (24,891) | (7,109) | 145 | 1,033 | 33,178
Repos, stock lending and similar agreements classified as:2 | 70,422 | (55,936) | 14,486 | (14,290) | (196) | — | 1 | 14,487
– trading liabilities | — | — | — | — | — | — | 1 | 1
– non-trading liabilities | 70,422 | (55,936) | 14,486 | (14,290) | (196) | — | — | 14,486
At 31 Dec 2025 | 116,109 | (69,478) | 46,631 | (39,181) | (7,305) | 145 | 1,034 | 47,665
Derivatives (Note 16)1 | 55,816 | (14,839) | 40,977 | (29,513) | (10,408) | 1,056 | 880 | 41,857
Repos, stock lending and similar agreements classified as:2 | 49,511 | (37,167) | 12,344 | (12,166) | (178) | — | 1 | 12,345
– trading liabilities | — | — | — | — | — | — | 1 | 1
– non-trading liabilities | 49,511 | (37,167) | 12,344 | (12,166) | (178) | — | — | 12,344
At 31 Dec 2024 | 105,327 | (52,006) | 53,321 | (41,679) | (10,586) | 1,056 | 881 | 54,202

1 At 31 December 2025, the amount of cash margin received that had been offset against the gross derivatives assets was EUR 421 million
(2024: EUR 720 million). The amount of cash margin paid that had been offset against the gross derivatives liabilities was EUR 8,192 million
(2024: EUR 1,592 million).
2 For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within 'Trading Assets' and
'Trading Liabilities', see the 'Funding sources and uses' table on page 169.
3 These exposures continue to be secured by financial collateral, but HSBC Continental Europe may not have sought or been able to obtain a legal opinion
evidencing enforceability of the right of offset.

30 Called up share capital and other equity instruments
Called up share capital and share premium
At 31 December 2025, HSBC Continental Europe's capital amounted to EUR 1,328 million divided into 265,583,192 ordinary shares with a
nominal value of EUR 5, fully paid up.

HSBC Continental Europe ordinary shares of EUR 5 each
| 2025 | 2024
| Number | €m | Number | €m
At 1 Jan | 265,583,192 | 1,328 | 212,466,555 | 1,062
Shares issued | — | — | 53,116,637 | 266
At 31 Dec | 265,583,192 | 1,328 | 265,583,192 | 1,328

HSBC Continental Europe share premium
| 2025 | 2024
| €m | €m
At 31 Dec | 6,747 | 6,747

Total called up share capital and share premium
| 2025 | 2024
| €m | €m
At 31 Dec | 8,075 | 8,075

HSBC Continental Europe Universal Registration Document and Annual Financial Report 2025
252

Notes on the consolidated financial statements

Other equity instruments
Additional tier 1 capital instruments

HSBC Continental Europe’s additional tier 1 capital instruments in issue which are accounted for as equity
|  | First call date | 2025 | 2024
|  | €m | €m
EUR 200 million | Perpetual Subordinated additional Tier 1 instruments issued in 2017 | 26/05/2022 | 200 | 200
EUR 300 million | Perpetual Subordinated additional Tier 1 instruments issued in 2018 | 28/03/2023 | 300 | 300
EUR 250 million | Perpetual Subordinated additional Tier 1 instruments issued in 2022 | 23/03/2027 | 248 | 248
EUR 250 million | Perpetual Subordinated additional Tier 1 instruments issued in 2024 | 18/12/2029 | 247 | 247
EUR 235 million | Perpetual Subordinated Resettable Additional Tier 1 instrument issued in 2016 | 01/01/2022 | 235 | 235
EUR 200 million | Perpetual Subordinated Resettable Additional Tier 1 instrument issued in 2019 1 | 01/01/2025 | — | 200
At 31 Dec |  | 1,230 | 1,430

1 Following ECB approval in December 2025 for the redemption of the EUR 200 million Perpetual Subordinated Resettable Additional Tier 1 instrument (issued in
2019), the instrument was reclassified from equity to liabilities as at 31 December 2025. The principal repayment of the instrument was completed on 2 January
2026.

31 Contingent liabilities, contractual commitments and guarantees
Contingent liabilities and commitments

| 2025 | 2024
| €m | €m
Guarantees and other contingent liabilities:1 |  |
– financial guarantees | 1,863 | 1,950
– performance and other guarantees | 18,155 | 16,899
– other contingent liabilities | 16 | 16
At 31 Dec | 20,034 | 18,865
Commitments:1,2 |  |
– documentary credits and short-term trade-related transactions | 743 | 1,099
– forward asset purchases and forward deposits placed | 51,073 | 35,132
– standby facilities, credit lines and other commitments to lend | 75,160 | 74,589
At 31 Dec | 126,976 | 110,820

1 HSBC Continental Europe successfully completed the sale of its Private Banking business in Germany on 3 October 2025. As at 31 December 2024, the
German Private Banking business was associated with EUR 0.3 million in guarantees and other contingent liabilities, in addition to EUR 454 million in
commitments.
2 Includes EUR 121,407 million of commitments at 31 December 2025 (2024: EUR 104,656 million), to which the impairment requirements in IFRS 9 are applied
where HSBC Continental Europe has become party to an irrevocable commitment.
The amounts disclosed in the above table reflect HSBC Continental Europe’s maximum exposure under a large number of individual guarantee
undertakings. The risks and exposures arising from gua r antees are captured and managed in accordance with HSBC Continental Europe’s
overall credit risk management policies and procedures. Guarantees with terms of more than one year are subject to HSBC Continental
Europe’s annual credit review process. The total of the nominal principal amounts is not representative of future liquidity needs.
Guarantees
HSBC Continental Europe provides guarantees and similar undertakings on behalf of both third-party customers and other entities within the
HSBC Group. These guarantees are generally provided in the normal course of HSBC Continental Europe's banking business. The principal
types of guarantees provided, and the maximum potential amount of future payments which HSBC Continental Europe could be required to
make at 31 December were as follows:

| 2025 | 2024
| In favour of third parties | In favour of other HSBC Group entities | In favour of third parties | In favour of other HSBC Group entities
| €m | €m | €m | €m
Guarantee type |  |  |  |
Financial guarantees contracts | 1,297 | 566 | 1,389 | 561
Performance and other guarantees | 16,599 | 1,556 | 15,551 | 1,348
At 31 Dec | 17,896 | 2,122 | 16,940 | 1,909

Financial guarantees include undertakings to fulfil the obligations of customers or group entities, should the obligated party fail to do so.
Financial guarantees also include stand-by letters of credit, which are financial guarantees given irrevocable obligations on the part of HSBC
Continental Europe to pay a third party when a customer fails to meet a commitment.
Performance guarantees include performance bonds, direct credit substitutes, stand-by letters of credit related to particular transactions which
are undertakings by which the requirement to make payment under the guarantee depends on the outcome of a future event which is
unconnected to the creditworthiness of the customer. Other guarantees includes bid bonds and another transaction-related guarantees which
are undertakings by which the requirement to make payment under the guarantee depends on the outcome of a future event which is
unconnected to the creditworthiness of the customer.

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Notes on the consolidated financial statements

The amounts disclosed in the above table reflect HSBC Continental Europe’s maximum exposure under a large number of individual guarantee
undertakings. The risks and exposures arising from guarantees are captured and managed in accordance with our overall credit risk
management policies and procedures.
Guarantees with terms of more than one year are subject to the annual credit review process.
HSBC Continental Europe has no contingent liabilities or commitments in relation to joint ventures or associates, incurred jointly or otherwise.
The majority of the above guarantees have a term of more than one year. Those guarantees are subject to HSBC Continental Europe’s annual
credit review process.
When HSBC Continental Europe gives a guarantee on behalf of a customer, it retains the right to recover from that customer amounts paid
under the guarantee.

32 Finance lease receivables
HSBC Continental Europe leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft), property
and general plant and machinery. At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are
calculated to recover the cost of assets less their residual value, and earn finance income.

| 2025 | 2024
| Total future minimum payments | Unearned finance income | Present Value | Total future minimum payments | Unearned finance income | Present Value
| €m | €m | €m | €m | €m | €m
Lease receivables |  |  |  |  |  |
– No later than one year | 80 | (12) | 68 | 131 | (16) | 115
– Later than one year and no later than five years | 261 | (37) | 224 | 366 | (54) | 312
– One to two years | 76 | (12) | 64 | 111 | (16) | 95
– Two to three years | 71 | (10) | 61 | 96 | (14) | 82
– Three to four years | 63 | (8) | 55 | 90 | (12) | 78
– Four to five years | 51 | (7) | 44 | 69 | (12) | 57
– Later than five years | 253 | (17) | 236 | 291 | (22) | 269
Total at 31 Dec | 594 | (66) | 528 | 788 | (92) | 696

33 Legal proceedings and regulatory matters relating to HSBC Group entities
generally
HSBC Group entities, including HSBC Continental Europe, are party to various legal proceedings and regulatory matters arising out of their
normal business operations. Apart from the matters described below and in the section ‘Legal risks and litigation management’ on pages 175 to
176 of the Universal Registration Document 2025, HSBC Continental Europe considers that none of these matters is significant. HSBC
Continental Europe recognises a provision for a liability in relation to these matters when it is probable that an outflow of economic benefits will
be required to settle an obligation which has arisen as a result of past events, and for which a reliable estimate can be made of the amount of
the obligation. Any provision recognised does not constitute an admission of wrongdoing or legal liability. While the outcome of these matters
is inherently uncertain, management believes that, based on the information available to it, appropriate provisions, as necessary, have been
made in respect of such legal proceedings as at 31 December 2025.
Bernard L. Madoff Investment Securities LLC
Various HSBC companies that provided custodial, administration and similar services to a number of funds whose assets were invested with
Bernard L. Madoff Investment Securities LLC (‘Madoff Securities’) have been named as defendants in lawsuits arising out of Madoff Securities’
fraud. HSBC Institutional Trust Services (Ireland) DAC (‘HTIE’) and/or its subsidiary Somers Dublin DAC (‘Somers’) face claims alongside other
HSBC companies.
On 1 August 2018, HSBC Continental Europe acquired from HSBC Bank plc 100 per cent of the shares of HTIE. Pursuant to the terms of the
Sale and Purchase Agreement, HSBC Continental Europe and/or its subsidiaries will be indemnified by HSBC Bank plc in respect of certain
liabilities relating to the activities of HTIE and/or Somers. (HTIE subsequently merged into HSBC Continental Europe Dublin Branch).
The Madoff Securities trustee (the ‘Trustee’) has brought lawsuits in the US against various HSBC companies, including Somers, seeking
recovery of alleged transfers from Madoff Securities to the HSBC companies in the amount of $508m (plus interest). In September 2025, the
US Bankruptcy Court for the Southern District of New York dismissed certain claims (not relating to Somers) in the amount of $324m. The
Trustee has appealed. The Trustee’s remaining claims (including those against Somers) which amount to $184m are pending.
The Trustee has filed a claim against various HSBC companies, including HTIE, in the High Court of England and Wales seeking recovery of
alleged transfers from Madoff Securities to the HSBC companies. The claim has not yet been served and the amount claimed has not been
specified.
Tax-related investigations
Since 2023, the French National Financial Prosecutor (‘PNF’) had been investigating HSBC Continental Europe and the Paris branch of HSBC
Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading activities. In January 2026,
HSBC Bank plc reached an agreement with the PNF to resolve its investigation. HSBC Bank plc paid a total of €302m and this matter is now
closed. The investigation into HSBC Continental Europe was closed with no further action.

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Notes on the consolidated financial statements

HSBC Bank plc and the German branch of HSBC Continental Europe continue to cooperate with investigations by the German public prosecutor
into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain trading activities.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any
possible impact on HSBC, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Continental Europe and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for
information, investigations and reviews by various tax authorities, regulators, competition and law enforcement authorities, as well as legal
proceedings including litigation and other contentious proceedings in connection with various matters arising out of its businesses and
operations.
At the present time, HSBC Continental Europe does not expect the ultimate resolution of any of these matters to be material to its financial
position. However, given the uncertainties involved in legal proceedings and regulatory matters, there can be no assurance regarding the
eventual outcome of a particular matter or matters.

34 Related party transactions
The ultimate parent company of the Group is HSBC Holdings plc, which is incorporated in the United Kingdom.
Copies of the Group financial statements may be obtained from the following address:
HSBC Holdings plc
8 Canada Square
London
E14 5HQ
All transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and security, as for
comparable transactions with persons of a similar standing or, where applicable, with other employees. The transactions did not involve more
than the normal risk of repayment or present other unfavourable features.
Key Management Personnel
The table below sets out transactions which fall under IAS 24 ‘Related Party Disclosures’ between HSBC Continental Europe and the Key
Management Personnel of HSBC Continental Europe and on one hand, their respective spouses and children living in the family home, and on
the other hand, controlled companies.

Transactions and balances during the year with Key Management Personnel
| 2025 | 2024
| Number of persons | Balance at 31 Dec 2 | Highest amounts outstanding during year 2 | Number of persons | Balance at 31 Dec 2 | Highest amounts outstanding during year 2
|  | €k | €k |  | €k | €k
Key Management Personnel 1 |  |  |  |  |  |
Advances and credits | 21 | 5,097 | 19,605 | 20 | — | —
Guarantees | 21 |  |  | 20 | — | —
Deposits | 21 | 4 |  | 20 | — | 480

1 Includes Key Management Personnel, close family members of Key Management Personnel and entities which are controlled or jointly controlled by Key
Management Personnel or their close family members.
2 The highest balance during the year and the balance at 31 December are considered to be the most significant information to show the transactions during the
year.
Compensation to the Key Management Personnel of HSBC Continental Europe under IAS 24 is disclosed as follows:

Compensation of Key Management Personnel
| 2025 | 2024
| €k | €k
Short-term employee benefits | 220 | 213
Post-employment benefits | 184 | 186
Other long-term employee benefits | — | —
Termination benefits | 59 | 84
Share-based payments | 1,066 | 923
At 31 Dec | 1,529 | 1,406

Shareholdings, options and other securities of Key Management Personnel
| 2025 | 2024
Number of options held over HSBC Holdings ordinary shares under employee share plans | — | —
Number of HSBC Holdings ordinary shares held beneficially and non-beneficially | 59,768 | 67,438
At 31 Dec | 59,768 | 67,438

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Notes on the consolidated financial statements

The Corporate governance report also includes a detailed description of Directors’ remuneration (see page 35 and following).
Transactions with other related parties
There is no significant amount due to joint ventures and associates.
Transactions detailed below include amounts due to/from HSBC Continental Europe and fellow subsidiaries of the HSBC Group.

Transactions and balances during the year with HSBC Bank plc, subsidiaries of HSBC Bank plc, HSBC Holdings plc and its subsidiaries 1
| 2025
| Due to/from HSBC Bank plc (Parent) | Due to/from subsidiaries of HSBC Bank plc | Due to/from HSBC Holding plc and its subsidiaries
| Highest balance during the year until 31 December | Balance at 31 December | Highest balance during the year until 31 December | Balance at 31 December | Highest balance during the year until 31 December | Balance at 31 December
| €m | €m | €m | €m | €m | €m
Assets |  |  |  |  |  |
Trading assets | 180 | 144 | — | — | 79 | 26
Derivatives | 13,257 | 8,861 | 6 | 2 | 2,728 | 1,521
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 52 | — | — | — | — | —
Loans and advances to banks | 1,230 | 1,087 | 442 | 3 | 1,023 | 986
Loans and advances to customers | — | — | 4 | — | 497 | 438
Financial investments | — | — | — | — | 96 | —
Reverse repurchase agreements – non-trading | 4,851 | 2,691 | — | — | 6,807 | 3,573
Prepayments, accrued income and Other assets | 5,555 | 890 | 117 | 38 | 1,515 | 639
Total related party assets at 31 Dec | 25,125 | 13,673 | 569 | 43 | 12,745 | 7,183
Liabilities |  |  |  |  |  |
Trading liabilities | 2 | — | — | — | 51 | 13
Deposits by banks | 1,491 | 813 | 422 | 284 | 1,552 | 752
Customer accounts | — | — | 1,012 | 1,012 | 463 | 284
Derivatives | 13,868 | 7,899 | 15 | 1 | 2,816 | 1,467
Subordinated amount due | 1,900 | 1,894 | — | — | — | —
Repurchase agreements – non-trading | 4,458 | 3,710 | 43 | — | 2,124 | 856
Provisions, accruals, deferred income and other liabilities | 6,451 | 2,002 | 57 | 18 | 2,159 | 580
Total related party liabilities at 31 Dec | 28,170 | 16,318 | 1,549 | 1,315 | 9,165 | 3,952
Guarantees and commitments | 12,134 | 3,291 | 310 | 257 | 2,544 | 1,796
| 2024
Assets |  |  |  |  |  |
Trading assets | 117 | 117 | — | — | 16 | —
Derivatives | 11,635 | 11,635 | 6 | 6 | 1,947 | 1,647
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 52 | 50 | — | — | 31 | —
Loans and advances to banks | 1,297 | 1,230 | 481 | 442 | 1,440 | 537
Loans and advances to customers | — | — | 4 | — | 549 | 298
Financial investments | — | — | — | — | 223 | 95
Reverse repurchase agreements – non-trading | 3,654 | 2,413 | — | — | 3,984 | 3,712
Prepayments,accrued income and Other assets | 7,853 | 3,039 | 121 | 92 | 1,957 | 1,515
Total related party assets at 31 Dec | 24,608 | 18,484 | 612 | 540 | 10,147 | 7,804
Liabilities |  |  |  |  |  |
Trading liabilities | 2 | — | — | — | 2 | 1
Deposits by banks | 1,447 | 652 | 470 | 423 | 2,270 | 1,322
Customer accounts | — | — | 60 | 59 | 420 | 250
Derivatives | 13,869 | 13,869 | 5 | 1 | 2,816 | 2,816
Subordinated amount due | 1,900 | 1,900 | — | — | 260 | —
Repurchase agreements – non-trading | 4,578 | 1,717 | 19 | 19 | 764 | 165
Provisions, accruals, deferred income and other liabilities | 5,978 | 691 | 75 | 43 | 1,380 | 351
Total related party liabilities at 31 Dec | 27,774 | 18,829 | 629 | 545 | 7,912 | 4,905
Guarantees and commitments | 4,224 | 265 | 243 | 231 | 2,559 | 2,416

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Notes on the consolidated financial statements

Transactions and balances during the year with HSBC Bank plc, subsidiaries of HSBC Bank plc, HSBC Holdings plc and its subsidiaries
| 2025 | 2024 1
| Due to/from HSBC Bank plc (Parent) | Due to/from subsidiaries of HSBC Bank plc | Due to/from HSBC Holding plc and its subsidiaries | Due to/from HSBC Bank plc (Parent) | Due to/from subsidiaries of HSBC Bank plc | Due to/from HSBC Holding plc and its subsidiaries
| €m | €m | €m | €m | €m | €m
Income Statement (continuing operations) |  |  |  |  |  |
Interest income | 515 | 2 | 93 | 478 | 6 | 135
Interest expense | 531 | 14 | 52 | 555 | 19 | 78
Fee income | 133 | 1 | 58 | 105 | 1 | 46
Fee expense | 104 | 1 | 43 | 100 | 2 | 37
Gains less losses from financial investments | — | — | — | — | — | —
Other operating income | 12 | 2 | 71 | 15 | 2 | 31
Dividend income | — | — | — | — | — | —
General and administrative expenses | 11 | 2 | 945 | 10 | 1 | 789

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the retained portfolio of home and
certain other loans in France.
The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and
security, as for comparable transactions with third-party counterparties.

35 Events after the balance sheet date
At its meeting on 24 February 2026, the Board of Directors resolved to distribute a dividend of EUR 5.20 per share (representing a total payout
of approximately EUR 1.4 billion) in respect of the 2025 financial year. This dividend, if approved by shareholders at the Combined General
Meeting, will be payable after deducting the interim dividend of EUR 1.06 per share already paid to shareholders in respect of the 2025 financial
year.
There have been no other significant events between 31 December 2025 and the date of approval of these financial statements by the Board of
Directors which would require an adjustment or additional disclosure in the financial statements.

36 HSBC Continental Europe subsidiaries, joint ventures and associates
HSBC Continental Europe classifies investments in entitie s which it controls as subsidiaries. HSBC Continental Europe consolidation policy is
described in Note 1.

Consolidated Subsidiaries | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)4
|  |  | 2025 | 2024
Actions Monde et Emergent 1 | France | Financial company | 0.0 | 100.0
Actions Monde et Europe 1 | France | Financial company | 0.0 | 100.0
Beau Soleil Limited Partnership | Hong Kong | Financial company | 85.0 | 85.0
CCF & Partners Asset Management Limited 5 | United Kingdom | Financial company | 100.0 | 100.0
Charterhouse Administrators (D.T) Limited | United Kingdom | Investment company | 100.0 | 100.0
Charterhouse Management Services Limited | United Kingdom | Investment company | 100.0 | 100.0
DEMPAR 1 6 | France | Financial company | 0.0 | 100.0
ERISA Actions Grandes Valeurs 1 | France | Financial company | 0.0 | 100.0
FCT HAV FI FLR 12-46 1 | France | Financial company | 0.0 | 97.0
Flandres Contentieux SA | France | Service company | 100.0 | 100.0
Foncière Elysées | France | Real estate company | 100.0 | 100.0
HLF | France | Commercial company | 100.0 | 100.0
HSBC Actions Europe Part 1 | France | Financial company | 0.0 | 51.5
HSBC Assurances Vie (France)7 | France | Insurance company | 0.0 | 100.0
HSBC Bank Malta p.l.c. | Malta | Financial company | 70.0 | 70.0
HSBC Euro Protect 80 Plus Part C 1 | France | Financial company | 0.0 | 78.1
HSBC Factoring (France) | France | Financial company | 100.0 | 100.0
HSBC GB Japan Eq Ind 2 | France | Financial company | 0.0 | 99.7
HSBC Global Asset Management (Deutschland) GmbH | Germany | Asset Management | 100.0 | 100.0
HSBC Global Asset Management (France) | France | Asset management | 100.0 | 100.0
HSBC Global Asset Management (Malta) Limited | Malta | Asset management | 70.0 | 70.0
HSBC Global Infrastructur Debt FD Feeder 1 | France | Financial company | 0.0 | 100.0
HSBC Global Investment Funds Gem Equity 1 | France | Financial company | 0.0 | 56.5
HSBC Horizon 2034 2036 A 3D 2 | France | Financial company | 0.0 | 76.7
HSBC Life Assurance (Malta) Limited | Malta | Insurance company | 70.0 | 70.0
HSBC Mix Dynamique FCP3DEC 1 | France | Financial company | 0.0 | 58.1
HSBC Mul.Ass.St.Fact.S FCP3DEC 1 | France | Financial company | 0.0 | 100.0
HSBC Operational Services GmbH 8 | Germany | Service Company | 0.0 | 100.0
HSBC Private Bank (Luxembourg) S.A | Luxembourg | Financial company | 100.0 | 100.0
HSBC Real Estate Leasing (France) | France | Financial company | 100.0 | 100.0
HSBC REIM (France) | France | Asset management | 100.0 | 100.0
HSBC Resp Inve Fd-Sri Dynamic Part Ac 1 | France | Financial company | 0.0 | 72.8
HSBC Resp Inves Funds-Sri Balanced Ac 1 | France | Financial company | 0.0 | 64.1

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Notes on the consolidated financial statements

Consolidated Subsidiaries | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)4
|  |  | 2025 | 2024
HSBC Resp Investment Funds Sri Global Equity 1 | France | Financial company | 0.0 | 61.8
HSBC Select Dynamic A FCP 2DEC 1 | France | Financial company | 0.0 | 78.6
HSBC Select Equity A Fcp 4Dec 1 | France | Financial company | 0.0 | 84.0
HSBC Select Flexible Part A 1 | France | Financial company | 0.0 | 63.9
HSBC Service Company Germany GmbH | Germany | Service Company | 100.0 | 100.0
HSBC Services (France) | France | Financial company | 100.0 | 100.0
HSBC Small Cap France 1 | France | Financial company | 0.0 | 52.7
HSBC Transaction Services GmbH | Germany | Service Company | 100.0 | 100.0
HSBC Trinkaus & Burkhardt (International) S.A. | Luxembourg | No active business | 100.0 | 100.0
HSBC Trinkaus & Burkhardt Gesellschaft fur Bankbeteiligungen mbH | Germany | Investment Company | 100.0 | 100.0
HSBC Trinkaus & Burkhardt GmbH | Germany | Financial Company | 100.0 | 100.0
HSBC Trinkaus Family Office GmbH 7 | Germany | Service Company | 0.0 | 100.0
HSBC Trinkaus Real Estate GmbH | Germany | Real Estate Company | 100.0 | 100.0
HSBC World Equity Protect 80 1 | France | Financial company | 0.0 | 98.9
Internationale Kapitalanlagegesellschaft mit beschränkter Haftung | Germany | Service Company | 100.0 | 100.0
Keyser Ullmann Limited | United Kingdom | Investment company | 100.0 | 100.0
OPCVM8 – Erisa Diversifié N2 FCP 1 | France | Financial company | 0.0 | 100.0
OPCVM9 – Erisa Opportunités FCP 1 | France | Financial company | 0.0 | 100.0
SAF Baiyun | France | Financial company | 100.0 | 100.0

Consolidated Subsidiaries | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)4
|  |  | 2025 | 2024
SAF Guangzhou | France | Financial company | 100.0 | 100.0
SAPC Ufipro Recouvrement | France | Service company | 99.9 | 99.9
SCI HSBC Assurances Immo 7 | France | Real estate company | 0.0 | 100.0
SFM | France | Commercial company | 100.0 | 100.0
SNC les Oliviers d’Antibes | France | Financial company | 60.0 | 60.0
Société Française et Suisse | France | Investment company | 100.0 | 100.0
Somers Dublin DAC | Ireland | Service company | 100.0 | 100.0
Trinkaus Europa Immobilien-Fonds Nr.3 Objekt Utrecht Verwaltungs-GmbH | Germany | Real Estate Company | 100.0 | 100.0
Trinkaus Immobilien-Fonds Geschaeftsfuehrungs-GmbH | Germany | Real Estate Company | 100.0 | 100.0
Trinkaus Immobilien-Fonds Verwaltungs-GmbH | Germany | Real Estate Company | 100.0 | 100.0
Trinkaus Private Equity Management GmbH | Germany | Asset Management | 100.0 | 100.0
Trinkaus Private Equity Verwaltungs GmbH | Germany | Asset Management | 100.0 | 100.0
Valeurs Mobilières Elysées | France | Investment company | 100.0 | 100.0
Associates | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)4
|  |  | 2025 | 2024
Trinkaus Europa Immobilien-Fonds Nr. 7 Frankfurt Mertonviertel KG 3 | Germany | Real Estate Company | 41.0 | 41.0

1 Excluded from consolidation.
2 Liquidation.
3 The stake in the entity is impaired to zero for years.
4 The percentages relating to the share of capital held by HSBC Continental Europe in the consolidated companies correspond to the percentages of voting rights
held.
5 In process of liquidation.
6 Dissolution without liquidation.
7 Sale.
8 Merger.

Non Consolidated Companies | Country of incorporation or registration | Reason of non-consolidation | HSBC Continental Europe interest (%)4
|  |  | 2025 | 2024
CCF Finance Moyen Orient SAL | Lebanon | In the course of liquidation since 2002 | 99.9 | 99.9
CCF Holding Liban SAL | Lebanon | In the course of liquidation since 2002 | 75.0 | 75.0
FL FINANZ LEASING Gmbh | Germany | In the course of liquidation | 25.0 | 25.0
HSBC Private Markets Management SARL | Luxembourg | This entity does not meet the definition of subsidiary according to IFRS accounting standards | 100.0 | 100.0
Select INKA | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0
Sopingest | France | Not consolidated as HSBC has lost its control. | 100.0 | 100.0
SNCB/M6 2007 A | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0
SNCB/M6 2007 B | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0
SNCB/M6 2008 A | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0

Partnerships
As of 31 December 2025, the contribution of HSBC Middle East Leasing Partnership (‘MELP’) to the consolidated total assets of HSBC
Continental Europe w as EUR 73 million (2024: EUR 89 million) and EUR 4 million (2024: EUR 9 million) to the consolidated income statement.

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Statutory Auditors’ report on the consolidated financial statements

PricewaterhouseCoopers Audit | BDO Paris
63, rue de Villiers | 43-47, avenue de la Grande Armée
92208 Neuilly-sur-Seine Cedex, France | 75116 Paris, France

Statutory Auditors’ report on the
consolidated financial statements
(For the year ended 31 December 2025)
To the Shareholders
HSBC Continental Europe
38, avenue Kléber
75116 Paris
Opinion
In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated financial
statements of HSBC Continental Europe for the year ended 31 December 2025.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the
Group at 31 December 2025 and of the results of its operations for the year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for opinion
Audit framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit of the
consolidated financial statements” section of our report.
Independence
We conducted our audit engagement in compliance with the independence rules provided for in the French Commercial Code (Code de
commerce) and the French Code of Ethics (Code de déontologie) for Statutory Auditors for the period from 1 January 2025 to the date of our
report, and, in particular, we did not provide any non-audit services prohibited by article 5(1) of Regulation (EU) No. 537/2014
Justification of assessments – Key audit matters
In accordance with the requirements of articles L.821-53 and R.821-180 of the French Commercial Code relating to the justification of our
assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in our professional judgement, were
the most significant in our audit of the consolidated financial statements, as well as how we addressed those risks.
These matters were addressed as part of our audit of the consolidated financial statements as a whole and therefore contributed to the opinion
we formed as expressed above. We do not provide a separate opinion on specific items of the consolidated financial statements.

Impairment of loans and advances to commercial customers
Description of risk | How our audit addressed this risk
At 31 December 2025, gross loans to non-financial customers amounted to EUR 30,346 million. The corresponding impairment amounted to EUR 516 million. Determining the expected credit losses requires management to exercise judgement. Management uses models and assumptions to assess expected credit losses, in particular to: – determine prospective economic scenarios and their likelihoods; – classify outstanding loans (stages 1, 2 and 3), based in particular on customer risk ratings (CRR); – estimate risk parameters; and – assess the recoverability of the loans. We deemed this impairment, particularly relative to non-financial customers, to be a key audit matter as it requires significant judgement on the part of management when preparing the consolidated financial statements, particularly given the current economic and geopolitical climate. | In response to this risk, we tested the controls we deemed key to our audit, in order to assess the relevance of the impairment losses estimated. Our tests concerned the design and efficiency of controls in place for impairment testing, including the process for rating counterparties, classifying loans (stages 1, 2 and 3) and approving recorded impairment. With the assistance of our credit risk experts, we assessed the appropriateness of the models, assumptions and macroeconomic scenarios used to measure expected credit losses. We also tested the appropriateness of the methods and policies used to determine allowances, using a sample of loans selected based on the level of risk. Based on this sample, we independently assessed the level of allowances recognised. We also assessed the appropriateness of the information relating to the impairment of loans and receivables due from customers.

u See Notes 1.2.j and 11 to the consolidated financial statements and the section entitled “Breakdown of financial assets by credit type” of the management
report.

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Statutory Auditors’ report on the consolidated financial statements

Recognition of deferred tax assets with respect to tax loss carryforwards
Description of risk | How our audit addressed this risk
Deferred tax assets recognised at the level of the French tax consolidation group amount to EUR 712 million in HSBC Continental Europe's consolidated financial statements at 31 December 2025, of which EUR 601 million are deferred tax assets on tax loss carryforwards. The valuation and recoverability of the deferred tax assets resulting from these tax loss carryforwards depend mainly on: – the taxable profit that the Group expects to generate in the future in France; – the French tax legislation applicable to the recognition and use of deferred tax assets arising from its tax loss carryforwards in France. The valuation and future use of deferred tax assets on tax loss carryforwards is based on significant judgements from management. These judgements relate primarily to forecasts of tax profit or loss, the duration of tax losses, and the feasible tax planning strategies available. Accordingly, given the significance of the amount of deferred tax assets at 31 December 2025 and the estimates and judgements made by management in recognising these deferred tax losses, we deemed them to be a key audit matter. | In response to this risk, our procedures consisted in: – testing the controls in place with respect to the calculation and recognition of deferred tax assets on tax loss carryforwards; – performing a critical review, with the help of our tax experts, of the assumptions used by management to estimate the recoverable amount of the estimated deferred tax assets on tax loss carryforwards at the year end. Our work consisted primarily in: – testing the key inputs used to estimate deferred tax on tax loss carryforwards, including cash flow forecasts for plans approved by the Board of Directors; – assessing management's estimates of forecasts of tax profit or loss by reviewing the temporary and permanent differences from prior years that are reflected in future forecasts; – assessing the relevance of the sensitivity analyses carried out by the Group to estimate deferred tax assets on tax loss carryforwards. Lastly, we assessed the appropriateness of the disclosures in the notes to the consolidated financial statements.

u See Notes 1.2.m and 8 to the consolidated financial statements.

Recognition of disposals and restructuring provisions
Description of risk | How our audit addressed this risk
As part of its transformation plan to refocus on institutional and corporate clients, HSBC Continental Europe is in the process of disposing certain non-strategic portfolios and businesses. In 2025, as part of this strategic reorganisation, the Group launched plans to restructure its workforce, primarily in France and Germany. At 31 December 2025, assets and liabilities held for sale amounted to EUR 377 million and EUR 10,648 million respectively. A loss of EUR 1,277 million from discontinued operations was recognised in the consolidated statement of comprehensive income in 2025. These transactions require management to exercise judgement, particularly with regard to the classification and measurement of assets and liabilities held for sale and the presentation of discontinued operations under IFRS 5. At 31 December 2025, restructuring provisions amounted to EUR 292 million. The measurement of these provisions is based on significant assumptions and judgements by management, particularly with regard to the estimation of severance payments, the probability of departure and the measurement of other costs directly attributable to the restructuring. Given the complexity of the disposals, the restructuring plans and the level of judgement exercised to measure the impacts on the consolidated financial statements as at 31 December 2025, we deemed these transactions to be a key audit matter. | Regarding the disposals, our procedures consisted primarily in: – assessing the appropriateness of the main judgements made by management in concluding that the proposed transactions are highly probable, taking into account the actions still required to complete these transactions; – testing the exhaustiveness and accuracy of assets and liabilities classified as held for sale and the profit or loss recognised. With regard to the restructuring provisions, and with the assistance of our experts, our procedures consisted in: – assessing the reasonableness of the methodologies and assumptions used to estimate the provisions recognised, particularly with regard to the specific social security legislation in force in France and Germany and the agreements negotiated; – assessing compliance with the criteria for recognising restructuring provisions; – using samples to test the data used to estimate provisions. Finally, we assessed the appropriateness of the disclosures in the notes to the consolidated financial statements relating to disposals and restructuring provisions.

u See Notes 1.3, 2 and 26 to the consolidated financial statements.
Specific verifications
As required by legal and regulatory provisions and in accordance with professional standards applicable in France, we have also performed the
specific verifications on the information pertaining to the Group presented in the Board of Directors’ management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
Other verifications and information pursuant to legal and regulatory requirements
Presentation of the consolidated financial statements to be included in the annual financial report
In accordance with professional standards applicable to the Statutory Auditors’ procedures for annual and consolidated financial statements
presented according to the European single electronic reporting format, we have verified that the presentation of the consolidated financial
statements to be included in the annual financial report referred to in paragraph I of article L.451-1-2 of the French Monetary and Financial Code
(Code monétaire et financier) and prepared under the Chief Executive Officer’s responsibility, complies with this format, as defined by
European Delegated Regulation No. 2019/815 of 17 December 2018. As it relates to the consolidated financial statements, our work included
verifying that the markups in the financial statements comply with the format defined by the aforementioned Regulation.
On the basis of our work, we conclude that the presentation of the consolidated financial statements to be included in the annual financial
report complies, in all material respects, with the European single electronic reporting format.
It is not our responsibility to ensure that the consolidated financial statements to be included by the Company in the annual financial report filed
with the AMF correspond to those on which we carried out our work.

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Statutory Auditors’ report on the consolidated financial statements

Appointment of the Statutory Auditors
We were appointed Statutory Auditors of HSBC Continental Europe by the Annual General Meetings held on 23 April 2015 for
PricewaterhouseCoopers Audit and on 10 May 2007 for BDO Paris.
At 31 December 2025, PricewaterhouseCoopers Audit and BDO Paris were in the eleventh and the nineteenth consecutive year of their
engagement, respectively.
Responsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for preparing consolidated financial statements giving a true and fair view in accordance with International Financial
Reporting Standards as adopted by the European Union and for implementing the internal control procedures it deems necessary for the
preparation of consolidated financial statements that are free of material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting, unless it expects to
liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk
management systems, as well as, where applicable, any internal audit systems relating to accounting and financial reporting procedures.
The consolidated financial statements were approved by the Board of Directors.
Responsibilities of the Statutory Auditors relating to the audit of the consolidated financial
statements
Objective and audit approach
Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions taken by users on the basis of these consolidated financial statements.
As specified in article L.821-55 of the French Commercial Code, our audit does not include assurance on the viability or quality of the
Company’s management.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise professional
judgement throughout the audit.
They also:
– identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures in response to those risks, and obtain audit evidence considered to be sufficient and appropriate to provide a basis for
their opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
– obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
– evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management and the
related disclosures in the notes to the consolidated financial statements;
– assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may
cause the Company to cease to continue as a going concern. If the Statutory Auditors conclude that a material uncertainty exists, they are
required to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not
provided or are inadequate, to issue a qualified opinion or a disclaimer of opinion;
– evaluate the overall presentation of the consolidated financial statements and assess whether these statements represent the underlying
transactions and events in a manner that achieves fair presentation;
– obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. The Statutory Auditors are responsible for the management, supervision and performance
of the audit of the consolidated financial statements and for the opinion expressed thereon.

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Statutory Auditors’ report on the consolidated financial statements

Report to the Audit Committee
We submit a report to the Audit Committee which includes, in particular, a description of the scope of the audit and the audit programme
implemented, as well as the results of our audit. We also report any significant deficiencies in internal control that we have identified regarding
the accounting and financial reporting procedures.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgement, were the most significant in
the audit of the consolidated financial statements and which constitute the key audit matters that we are required to describe in this report.
We also provide the Audit Committee with the declaration provided for in article 6 of Regulation (EU) No. 537/2014, confirming our
independence within the meaning of the rules applicable in France, as defined in particular in articles L.821-27 to L.821-34 of the French
Commercial Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our independence and
the related safeguard measures with the Audit Committee.

Neuilly-sur-Seine and Paris, 25 February 2026
The Statutory Auditors
PricewaterhouseCoopers Audit | BDO Paris
Amel Hardy-Ben Bdira | Vincent Génibrel

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Parent company financial statements

Parent company financial statements

Contents
263 | Income statement
264 | Balance sheet
265 | Statement of reported net profit and movements in shareholders' funds
265 | 2025 Highlights

Notes on the parent company financial
statements

Contents
267 | 1 | Principal accounting policies
272 | 2 | Loans and advances to banks
272 | 3 | Loans and advances to customers
273 | 4 | Portfolios of trading, available-for-sale and held-to-maturity securities
274 | 5 | Investments in subsidiaries, affiliates and equity securities held for long term
275 | 6 | Intangible assets
275 | 7 | Tangible assets and finance leases
276 | 8 | Loan impairment
276 | 9 | Other assets
276 | 10 | Prepayments and accrued income
277 | 11 | Deposits due to credit institutions
277 | 12 | Customer accounts
277 | 13 | Debt securities in issue
278 | 14 | Provisions
278 | 15 | Other liabilities
278 | 16 | Accruals and deferred income
278 | 17 | Subordinated debt
279 | 18 | Share capital
279 | 19 | Equity
280 | 20 | Pensions and other post-retirement benefits
281 | 21 | Off–balance sheet items
281 | 22 | Derivatives
282 | 23 | Net interest income
283 | 24 | Income from equities and other variable income securities
283 | 25 | Commissions received and commissions paid
283 | 26 | Gains or losses on trading securities
283 | 27 | Gains or losses on available-for-sale securities
283 | 28 | General operating expenses
284 | 29 | Gains or losses on disposals of fixed assets and long term investments
284 | 30 | Exceptional items
284 | 31 | Current and deferred tax
285 | 32 | Legal proceedings and regulatory matters relating to HSBC Group entities
286 | 33 | Presence in non-cooperative states or territories
286 | 34 | Events after the balance sheet date
286 | 35 | Other information
288 | Statutory Auditors' report on the financial statements
292 | Allocation of net profit

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Parent company financial statements

Income statement

(in million of euros) | Notes | 31 Dec 2025 | 31 Dec 2024
Income/(Expenses) |  |  |
Interest and similar income | 23 | 7,017 | 8,806
Interest and similar expenses | 23 | (6,256) | (7,944)
Finance leases income |  | 28 | 55
Finance leases expenses |  | (14) | (38)
Income from equities and other variable income securities | 24 | 86 | 619
Commissions received | 25 | 1,521 | 1,429
Commissions paid | 25 | (766) | (635)
Gains and losses on trading securities | 26 | 932 | 654
Gains or losses on available-for-sale securities | 27 | 75 | (90)
Other banking operating income |  | 147 | 138
Other banking operating expenses |  | (50) | (28)
Net banking operating income |  | 2,720 | 2,966
General operating expenses | 28 | (2,108) | (1,791)
Depreciation, amortisation and impairment of tangible and intangible assets |  | (144) | 70
Gross operating income |  | 468 | 1,245
Loan impairment charges | 8 | (177) | (117)
Net operating income |  | 291 | 1,128
Gains or losses on disposals of fixed assets and long term investments | 29 | 599 | (349)
Profit/(loss) before tax |  | 890 | 779
Exceptional items | 30 | (961) | 13
Current and deferred tax | 31 | 5 | (293)
Gains and losses from regulated provisions |  | — | —
Net profit/(loss) for the period |  | (66) | 499

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Parent company financial statements

Balance sheet

Assets
(in million of euros) | Notes | 31 Dec 2025 | 31 Dec 2024
Cash and amounts due from central banks and post office banks |  | 58,607 | 50,946
Treasury bills and money-market instruments 1 | 4 | 41,987 | 27,426
Loans and advances to banks 2 | 2 | 28,381 | 22,634
Loans and advances to customers 3 | 3 | 43,454 | 53,373
Bonds and other fixed income securities 1 | 4 | 13,251 | 11,864
Equities and other variable income securities | 4 | 7,063 | 6,415
Investments in subsidiaries and equity securities held for long term | 5 | 64 | 62
Interests in affiliated parties | 5 | 1,358 | 1,878
Finance leases | 7 | 11 | 32
Intangible fixed assets 4 | 6 | 251 | 113
Tangible fixed assets | 7 | 65 | 84
Other assets | 9 | 14,922 | 20,755
Prepayments and accrued income | 10 | 39,796 | 39,056
Total assets |  | 249,210 | 234,638
Off-balance sheet items |  |  |
Financial commitments given | 21 | 61,224 | 60,036
Guarantees and endorsements given | 21 | 20,632 | 19,273
Securities commitments (other commitments given) |  | 34,006 | 30,312

Liabilities
(in million of euros) | Notes | 31 Dec 2025 | 31 Dec 2024
Central bank and post office banks |  | 5 | 14
Deposits due to credit institutions 2 | 11 | 26,926 | 20,276
Customer accounts 3 | 12 | 105,258 | 97,977
Debt securities in issue | 13 | 25,160 | 25,821
Other liabilities 1 | 15 | 45,937 | 38,296
Accruals and deferred income | 16 | 30,423 | 36,563
Provisions for liabilities and charges | 14 | 468 | 270
Subordinated debt | 17 | 3,369 | 3,407
Share capital | 18 &19 | 1,328 | 1,328
Additional paid-in capital | 19 | 7,291 | 7,291
Reserves | 19 | 1,113 | 1,088
Special tax-allowable reserves |  | — | —
Retained earnings 5 | 19 | 2,280 | 1,808
Net profit/(loss) for the period | 19 | (66) | 499
Interim dividend |  | (282) | —
Total liabilities |  | 249,210 | 234,638
Off-balance sheet items |  |  |
Financial commitments received | 21 | 522 | 1,052
Guarantees and endorsements received | 21 | 697 | 7,379
Securities commitments (other commitments received) |  | 52,214 | 35,976

1 After the application of offsetting for assets and liabilities arising from securities borrowing transactions. Refer to Note 1, Note 4 and Note 15.
2 After the application of offsetting of repurchase and reverse repurchase agreements. Refer to Note 1, Note 2 and Note 11.
3 After the application of offsetting of repurchase and reverse repurchase agreements and regulated savings accounts against balances centralised at the Caisse
des Dépôts et Consignations. Refer to Note 1, Note 3 and Note 12.
4 Includes the capitalization of internally generated intangible assets on previous years.
5 Before proposed allocation submitted to Annual General Meeting for approval.

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Statement of reported net profit and movements in shareholders’ funds

(in million of euros) | 31 Dec 2025 | 31 Dec 2024
Net profit/(loss) for the period |  |
Total | (66) | 499
– per share (in euros)1 | (0.25) | 1.88
Movements in shareholders‘ funds (excluding the net profit of 2025) (after allocation of 2024 net profit) |  |
– change in revaluation reserve | — | —
– transfer to reserves and change in retained earnings | 499 | 671
– allocation of net profit for the previous year | 499 | 671
– appropriation of net profit | — | —
– restatement of opening retained earnings 2 | (2) | (20)
– change in special tax-allowable reserves | — | —
– acquisition/disposals | — | —
Change in shareholders’ funds | 497 | 651
– per share (in euros)1 | 1.87 | 2.45
Proposed dividend | — | —
– total | 1,381 | —
– per share (in euros)1 | 5.2 | —

1 Number of shares outstanding at year end: 265,583,192 in 2025 and 265,583,192 in 2024.
2 Retained earning adjustment on branches on previous year.

2025 Highlights
Business review
Net banking operating income was EUR 2,720 million, down EUR 246 million year-on-year, primarily due to reduced dividend income to the
German branch from its subsidiaries. This was partially offset by positive mark-to-market movements on trading securities.
General operating expenses increased by EUR 317 million to EUR 2,108 million, mainly reflecting restructuring provisions in France and
Germany and higher intercompany recharges.
Depreciation, amortisation and impairment of tangible and intangible assets totalled EUR 144 millio n, up EUR 213 million, largely due to
the reversal of the goodwill impairment of EUR 116 million in 2024 following the disposal of the retail banking operations and additional
depreciation of EUR 47 million from capitalised internally developed software and impairment in the German Branch of EUR 63 million in 2025.
Loan impairment charges were EUR 177 million (up EUR 60 million), year-on-year increment driven by higher stage 3 charges in France and in
branches of EUR 110 million, partially offset by EUR 50 million reduction in impairment in the German branch.
Gains or losses on disposals of fixed assets and long term investments were a gain of EUR 599 million, compared to a loss of EUR 349
million in 2024. Gains in 2025 were mainly from the pre-tax sale of HSBC Assurances Vie in France and the private banking business in Germany
and non-occurrence of prior year losses attributed to goodwill write-off in France and impairment of the German branch’s investment in HSBC
Trinkaus & Burkhardt GmbH.
Exceptional items were a loss of EUR 961 million, compared to a gain of EUR 13 million in 2024, primarily due to the sale of the retained
portfolio of home and certain other loans in France.
Current and deferred taxes were a credit of EUR 5 million (2024: EUR 293 million charge), primarily driven by a EUR 158 million credit in
France triggered from recognition of deferred tax assets on tax losses and restructuring provisions accounted for during the year, offset by a
EUR 153 million tax charge for branches.
Net loss for t he period was EUR 66 million, compared to a profit of EUR 499 million in December 2024.
At 31 December 2025, the total balance sheet of HSBC Continental Europe amounted to EUR 249 billion compared to EUR 235 billion on
31 December 2024.
Business disposals
Retained portfolio of home and certain other loans in France
Following the sale of our French retail banking operations on 1 January 2024, HSBC Continental Europe retained a portfolio of home and certain
other loans, with a carrying value of EUR 7.1 billion at the time of sale. On 31 October 2025, HSBC Continental Europe completed the sale of its
retained portfolio to a consortium comprising Rothesay Life plc and CCF. The completion of the transaction resulted in a pre-tax loss of EUR 1.1
billion booked in exceptional items.
French Life Insurance Business
On 31 October 2025, HSBC Continental Europe completed the sale of its French life insurance business, HSBC Assurances Vie (France), to
Matmut Société d’Assurance Mutuelle. The completion of the transaction resulted in a pre-tax gain of EUR 450 million booked in reporting line
"disposals of fixed assets and long term investments".

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Private Banking business in Germany
On 3 October 2025, HSBC Continental Europe completed the sale of its private banking business in Germany to BNP Paribas. The completion of
the transaction resulted in a pre-tax gain of EUR 149 million booked in reporting line "disposals of fixed assets and long term investments".
u More details are provided in section 'Notes on the consolidated financial statements', please refer to note 1.3 Significant events during the year.
Recognition of restructuring provision
On 14 May 2025, following HSBC Group announcements, HSBC Continental Europe proposed developments for the bank that reflect the
acceleration of the implementation of HSBC’s strategy aimed at simplifying the organisation to make it more agile, bringing together
Commercial Banking activities and Global Banking and Markets activities. This project across 10 countries was subject to a consultation with the
European Works Council. Local consultations are also required in France (through a ‘Plan de Sauvegarde de l’Emploi‘ (Social Plan) including a
voluntary scheme) and in Germany before any implementation. During 2025, HSBC Continental Europe recognised EUR 231 million of
restructuring costs relating to these actions, primarily termination benefits.
Issuances and repayments
In February 2025, HSBC Continental Europe redeemed perpetual floating rate notes previously recognised as Tier 2 Capital with a total
outstanding amount of EUR 16 million.
In May 2025, HSBC Continental Europe redeemed a Tier 2 loan at the first call date five years before maturity for EUR 500 million and issued a
new Tier 2 loan to HSBC Bank plc with maturity of eleven years for a notional amount of EUR 500 million.
In May 2025, HSBC Continental Europe redeemed a Tier 2 promissory note loan (Schuldscheindarlehen), which was issued by the Germany
branch of EUR 10 million, maturing in June 2028.
In June 2025, HSBC Continental Europe redeemed two further Tier 2 promissory note loans (Schuldscheindarlehen), both issued by the
Germany branch of EUR 10 million and EUR 5 million respectively, both maturing in July 2025.

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Notes on the parent company financial statements

Notes on the parent company financial
statements
1 Principal accounting policies
The financial st ate ments of HSBC Continental Europe are prepared in accordance with Regulations 2014-03 and 2014-07.
ANC Regulation 2022-06, which became effective on 1 January 2025, had no impact on HSBC Continental Europe financial statements.
(a)Securities portfolio
Securities transactions are recognised in accordance with the principles set out in articles 2311-1 to 2391-1 of 2014-07 ANC regulation.
Securities are categorised as follows:
– trading account securities;
– available-for-sale securities;
– held-to-maturity securities;
– portfolio activity securities;
– other long-term securities; and
– interests in subsidiaries and associates.
Securities are recognised on the balance sheet at the date of settlement.
Trading securities
Trading securities are negotiable securities traded on an active market, originally acquired or sold with the intention of reselling or buying back
within short timescale and are held for market activities or form part of a global portfolio trading management.
Trading securities are stated at acquisition price and acquisition costs are directly recognised as expenses. At the balance sheet date, the
securities are valued at the market price, and changes in value are recognised through profit or loss. Gains or losses on trading securities are
recorded under the heading ‘Gains and losses on trading securities’.
Available for sale securities
Other investment securities are those securities not treated as trading account securities, neither portfolio activity securities nor as securities
covered by articles 2351-1, 2351-2 and 2351-3 of 2014-07 ANC regulation. These are acquired for the purposes of income and available for sale
within a relatively short timescale.
On the date of acquisition, they are recorded at acquisition price. Acquisition costs are included in the acquisition price in accordance with the
accounting policy adopted by HSBC Continental Europe, pursuant to article 2371-2 of 2014-07 ANC regulation.
According to article 2332-3 of 2014-07 ANC regulation, when the acquisition price of fixed-income securities is higher than their redemption
price, the difference is amortised over the lifespan of the securities. When the acquisition price of fixed-income securities is lower than their
redemption price, the difference is recognised over the residual life of the securities. The amortisation of these differences is carried out using
the actuarial method.
At the closing date, unrealised losses arising from the difference between the book value, adjusted for amortisation and reversal of differences
described in the preceding paragraph, and the market price of securities are subject to impairment. Gains arising from affected hedging
transactions are considered for the calculation of impairment losses. The latent gains are not accounted for.
Gains or losses on sale and changes in impairment of available-for-sale securities are recorded under the heading ‘Gains or losses on available
for-sale securities’.
Investment securities
Fixed-income securities that were acquired with the intention and the capacity to hold them on a long term basis, and in principle till maturity,
are categorised as held-to-maturity securities.
Portfolio activity securities are recognised on the date of acquisition at their purchase price. Acquisition costs are included in the acquisition
price in accordance with the accounting policy adopted by HSBC Continental Europe, pursuant to Art. 2371-2 of ANC Regulation n° 2014-07.
According to article 2342-2 of 2014-07 ANC regulation, where the acquisition price of fixed income securities is greater than their redemption
value, the difference is amortised over the residual life of the securities. When the acquisition price of fixed-income securities is lower than their
redemption price, the difference is recognised over the residual life of the securities. The spreading of these differences is carried out using the
actuarial method.
At the closing date, unrealised losses arising from the difference between the book value, adjusted for amortisation and reversal of differences
described above, and the price of fixed income securities are not subject to the impairment, except if there is a strong probability that the
institution will not keep the securities until the maturity because a number of new circumstances and without depreciation prejudice to establish
in application of the Title 2 terms from the book II of current regulation, dealing with credit risk on securities, if there is any existence of the
issuer’s defaulted risk. The latent gains are not accounted for.
Gains or losses on sale and impairment charges are recognised under the heading ‘Gains or losses on disposals of long-term investments’ in the
income statement.

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Portfolio activity securities
This category covers investments made under normal arrangements with the sole objective of making medium-term capital gains without
intention of investing in the long-term in the business of the issuing entity, nor of taking an active part in the management of its operations. This
is particularly the case for securities held in venture capital businesses.
Portfolio activity securities are initially recognised at their acquisition price and subsequently measured at the lower of their historical cost or
value-in-use. According to article 2352-4 of 2014-07 ANC regulation, each accounting period, the latent losses resulting from the difference
between the book value and the value in use, calculated line by line of securities, are subject to an impairment test without compensation with
the largest gains identified. The latent gains are not accounted for.
Gains or losses on sale and impairment charges are recognised under the heading ‘Gains or losses on disposals of long-term investments’ in the
income statement.
Other long-term securities
‘Other long-term securities’ are equity shares and similar securities that HSBC Continental Europe intends to hold long term to derive a
satisfactory return within an undefined period of time, without however taking any part in managing the businesses in which the shares are
held, but with the intention of fostering long-term business relationships by creating a special link with the issuing companies.
These securities are accounted at their acquisition price with subsequent measurement at the lowest of their acquisition value or their value-in-
use, representing the amount the company would be prepared to pay to obtain these securities if it had to acquire them given its holding
objective.
Gains or losses on sale and impairment charges are recognised under the heading ‘Gains or losses on disposals of long-term investments’ in the
income statement.
Interests in subsidiaries and associates
The heading ‘Interests in subsidiaries and associates’ regroups securities held long-term (equity interests)) whose long term holding is
considered useful to business activity, in particular as it allows the company to exercise influence or control over the entity issuing the
securities.
According to article 2352-6 of 2014-07 ANC regulation, for other long term held securities, whether listed or not, the utility value takes into
account the intention of the entity to hold these securities until it has the capacity to fund part of its assets. Provided that their evolution does
not result from accidental circumstances; the elements that must be taken into account for this estimate include: profitability and perspective of
profitability, own capital, perspective of realisation, economic situation, and the average course of the stock market in recent months.
Art in French for reference.
Selon l’article 2352-6 du règlement n° 2014-07 de l’ANC, pour les autres titres détenus à long terme, les titres de participation et parts dans les
entreprises liées, cotées ou non, la valeur d'utilité représente ce que l'entreprise accepterait de décaisser pour obtenir ces titres si elle avait à
les acquérir compte tenu de son objectif de détention. À condition que leur évolution ne résulte pas de circonstances accidentelles, les
éléments suivants peuvent être pris en compte pour cette estimation: rentabilité et perspective de rentabilité, capitaux propres, perspective de
réalisation, conjoncture économique, cours moyens de bourse des derniers mois.
Gains or losses on sale and impairment charges are recognised under the heading ‘Gains or losses on disposals of long-term investments’ in the
income statement.
Sale and repurchase agreements and related transactions
Stock lending or temporary acquisition, governed for legal purposes by law no. 93-1444 of 31 December 1993, amended by law no. 2003-1311
of 30 December 2003, referred to as stock repurchase agreements, have no impact on the composition and valuation of the securities portfolio.
For accounting purposes, in accordance with article 2413-1 to 2413-4 of 2014-07 ANC regulation, they are considered as financing transactions,
cash movement balanced entries are recognised either as a loan or a deposit. Related income and expenses are recognised as interest.
Repurchase and reverse repurchase agreements
Repurchase transactions that do not fall within the scope of law no. 93-1444 ‘Buy and sell back’ transactions as well as loans/borrowing of
securities guaranteed by cash deposits are categorised under this heading in the balance sheet. Their treatment for accounting purposes is
similar to that described above for securities under sale and repurchase agreements.
Securities lending and borrowing
Securities lending and borrowing transactions are recognised in accordance with the principles set out in the article 2361-2 of 2014-07 ANC
regulation.
In accordance with the provisions of Regulation 2020-10, securities borrowed are presented net of the corresponding liabilities.
(b)Loans and advances
Loans assessed individually
Non-performing and impaired loans
Non-performing loans and impaired loans are recorded in accordance with the article 2222-1 to 2222-2 of 2014-07 ANC regulation.
Non-performing loans include all types of receivables, including secured receivables (for which the bank held a collateral), for which there is a
risk that the bank will not recover in full or in part the contractual cash flows.
Loans and receivables are classified according to HSBC Continental Europe’s internal loan rating system. Performing loans have a rating of
between 1 and 8, non-performing loans have a rating of 9 and impaired loans, including doubtful loans not yet written off, have a rating of 10.

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The following are therefore classified as non-performing loans:
– receivables overdue for more than three months for all types of loans and equipment leases, more than six months for property loans or leases
and more than nine months for loans to local government bodies;
– receivables having risk criteria;
– receivables which, even before the expiry of these time limits, become subject to litigation (judicial settlement, judicial liquidation, personal
bankruptcy, etc.); and
– receivables deriving from debt restructuring for which the debtor is again in default.
HSBC Continental Europe applies the provisions of articles 2221-2 of 2014-07 ANC regulation on identifying overdrafts at risk of default. For
overdrafts, the overdue period starts when:
– the debtor exceeds an authorised limit that has been notified to him by HSBC Continental Europe; or
– the debtor is notified that the amount outstanding exceeds a limit set up by HSBC Continental Europe under its internal control system; or
– the debtor withdraws amounts without overdraft authorisation.
The downgrade to non-performing loans immediately leads to all amounts outstanding and commitments for that debtor that are in the same
category, according to contagion principle and, if applicable, the downgrade of counterparties belonging to the same group to non-performing
debtors, on a case-by-case assessment.
In application of the article 2221-8, 2231-3 of 2014-07 ANC regulation on accounting treatment of credit risk, HSBC Continental Europe has
introduced a specific system for dealing with restructured debt and impaired loan.
In application of the articles 2221-8 of 2014-07 ANC regulation, impaired loans are those for which the prospect of recovery is very remote and
for which a write-off is being considered. These include receivables which are long overdue or for which the contract has been terminated in
case of leasing, and also receivables that have been categorised as non-performing for more than one year, unless final write-off is not being
considered because of information on the prospects for recovery available at that stage. Interests on impaired loans are not recognised through
profit or loss until the date of actual payment.
Reclassification into performing loans
In application of the article 2221-5 of the 2014-07 ANC regulation, a loan that has been classified as non-performing may be reclassified as
performing when the original scheduled payments have been resumed without further incident.
In the case of restructured loans, the classification of doubtful exposure can be omitted, if the exposure complies firstly with the previous
condition, and, on the other hand, the counterparty risk is lifted.
Recognition of gains and losses
Charges for impairment against non-performing and impaired loans, included in the calculation of the banking result, are determined annually on
the basis of the non recovery risk assessment by analysing each loan individually. In application of the article 2231-2 of the 2014-07 ANC
regulation, impairment of non-performing and impaired loans has been calculated on the basis of the difference between the net present value
of expected future recoveries and the carrying amount of the loan. Impairment may not be less than the amount of unpaid, recognised interest
on the loan.
In the income statement, charges and releases of provisions, losses on irrecoverable receivables and recoveries on amortised receivables are
recognised in the ‘Loan impairment charges’ line.
(c)Due to credit institutions and customer accounts
All liabilities towards banks and customers are recognised at amortised cost. These headings include repurchase transactions.
(d)Debt securities in issue
Debt securities are classified according to their nature: except subordinated securities, which are recorded under subordinated debt.
Accrued unpaid interest on these securities is recorded in the balance sheet in an accrued interest account with a corresponding amount
recognised in profit or loss.
Premiums or discounts related to bonds in issue are amortised on an actuarial basis over the life of the bond. Related fees are recognised over
the life of the bond on a straight-line basis.
(e)Provisions
In accordance with 2014-03 ANC regulation, provisions are registered where it is probable that an outflow of resources, without an at least
equivalent inflow being expected from the beneficiary (whether known or not), will be required to extinguish a legal or implicit obligation arising
from past events and where the amount of the obligation can be reliably estimated.
Retirement and other benefit liabilities
HSBC Continental Europe has opted to adopt ANC recommendation 2013-02 on the rules for recognising and measuring obligations for
retirement and similar benefits.
HSBC Continental Europe provides some of its employees post-employment benefits such as pension plans and end of service benefits.
The costs recognised for funding these defined-benefit plans are determined using the projected unit credit method, with annual actuarial
valuations being performed on each plan.
Actuarial gains or losses are recognised immediately through profit or loss.

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The current service costs and any past service costs, together with the expected return on scheme assets less the unwinding of the discount
on the scheme liabilities, are recognised as operating expenses.
The net defined-benefit liability recognised in the balance sheet represents the present value of the defined-benefit obligations adjusted for
unrecognised past service costs and reduced by the fair value of the scheme’s assets. Any resulting asset from this is limited to unrecognised
past service costs plus the present value of available refunds and reductions in future contributions to the plan.
Payments to defined-contribution plans and state-managed retirement benefit plans, where HSBC Continental Europe’s obligations under the
plans are equivalent to a defined-contribution plan, are charged as an expense as they fall due.
Provision for share-based payments
Shares plan
HSBC Continental Europe grants bonus share plans to these employees for services rendered.
The expense is recognised in the income statement on the period between the granted date and the acquisition date.
The cancellation of expense may result due to the inability to meet acquisition conditions during the period of acquisition.
The amount recorded in the income statement corresponds to the shares finally acquired by the employees.
(f)Foreign exchange position
In accordance with the article 2711-1 to 2731-1 of 2014-07 ANC regulation, foreign currency exchange positions (asset and/or liabilities) are
remeasured at the end of period prevailing rate, with the corresponding gains or losses recognised in the bank operating income or expense.
It should be noted that the institutions subject to this standard recognise currency exchange transactions at spot rates, as well as other foreign
currency operations in the accounts opened and labelled in each of the currencies used. Are considered as spot foreign exchange transactions,
purchases or sales of currencies for which parties do not defer the outcome or only defer it because of the period of use.
At each accounting closure, the balance sheet's active, passive, and off-balance sheet items are evaluated at the exchange rate prevailing at the
closure date or the closest market rate prior to this date if more relevant. The market rate applicable to assets, liabilities and foreign exchange
commitments is the spot rate of the relevant currency. The market rate applicable to forward foreign exchange commitments is the remaining
forward rate of the relevant currency.
(g)Forward foreign exchange contracts
Unsettled Forward exchange contracts at the closing of the period hedged by a corresponding spot transactions are valued at the period end
spot rate. Differences between spot and forward rates are recorded on a time-apportioned basis in the income statement. Outright forward
exchange contracts and those hedged by forward instruments are restated at the rate for the remaining period.
(h)Financial derivatives
The HSBC Continental Europe group operates on all financial instruments markets, whether on behalf of its customers or for the purposes of
hedging balance sheet items or for arbitration purposes.
Interest rate and currency options
Options are contracts reached between two parties by which one, the buyer, is granted the right to buy or to sell an actual asset or another
financial instrument called an ‘underlying asset’ at the expiry of a certain time period, at a price agreed at the time the contract was concluded.
Option contracts result in a premium being paid by the buyer to the seller. HSBC Continental Europe has interest rate and currency options.
The basic accounting treatment principles for these various products are identical.
On closing out the contract, the notional amount of the ‘underlying asset’, which is the subject of the option, is recorded as an off-balance sheet
item.
Currency swaps and/or interest rates (swaps, FRAs)
Currency and/or interest rate swaps are recognised in accordance with the articles 2521-1 and 2529-1 of the 2014-07 ANC regulation.
The contracts are recorded separately depending whether their purpose is to:
– To hold a stand-alone open positions to take advantage of any beneficial changes in interest rates;
– To hedge, demonstrably from the outset, in accordance with the above-mentioned article 4 of CRBF regulation 88-02 as amended, interest-rate
risk affecting an item or a group of similar items or credit risk in the case of Credit Default Swaps (‘CDS’);
– To hedge and manage the entity’s overall interest rate risk on assets, liabilities and off-balance sheet items; and
– For trading inten.
On the accounting side, methodology varies depending on whether the transactions are for hedging or trading business purposes.
The results of the hedging of assets or liabilities are recorded pro rata temporise. This is particularly the case for swaps traded as part of the
asset/liability management of overall interest rate risk.
The consideration received or paid on termination/assignment of an interest rate/foreign exchange risk derivative is accounted immediately in
profit or loss. However, when a derivative originally met the defined conditions mentioned in points b) and c) of the article 2522-1 and that

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derivative is terminated or assigned and potentially replaced by another contract or an equivalent instrument, the consideration received or paid
can be spread out in profit and loss pro rata temporis.
Income on positions managed as part of a trading portfolio of swaps is recognised at market value after a reduction to reflect counterparty risk
and future management expense.
The notional are recorded as off-balance-sheet items.
Offsetting rules
Offsetting rules are applied where it is established that reciprocal obligations are settled on a net basis with the same counterparty, currency
and maturity date, and where agreements are in place for which the right of offset can be exercised. When the conditions for offsetting are met,
the offsetting rules are applied to both derivatives exposures and related cash collateral.
Counterparty risk on derivatives
The fair value of contracts has to take into account counterparty risk linked to contracts.
The adjustment to value for counterparty risk is at least equal to the cost in equity determined under the terms of articles 2525-3 of 2014-07
ANC regulation.
(i)Initial recognition and subsequent measurement of tangible and intangible
assets
HSBC Continental Europe applies the component approach in the recording and amortising of fixed assets.
HSBC Continental Europe complies with ANC Regulation 2014-03 for initial recognition, amortisation and impairment of tangible assets.
Investment property and operational building
For operating and investment fixed assets, HSBC Continental Europe adopted the components approach with the following minimum cap on
the useful lives and methods of the corresponding components:

Components | Periods and depreciation and amortisation methods
Infrastructure |
Building | 25 and 50 years on a straight-line basis
Civil engineering works | 25 years on a straight-line basis
Technical installations |
Air conditioning Ventilation Heating | 10 years on a straight-line basis
Electrical installations | 10 years on a straight-line basis
Telephone and electrical fittings | 10 years on a straight-line basis
Security fittings | 10 years on a straight-line basis
Fittings |
Improvements and internal fittings | 10 years on a straight-line basis

Other fixed assets
For other fixed assets, depreciation periods are determined according to the remaining useful lives of the assets concerned:

Components | Periods and depreciation and amortisation methods
Office equipment | 5 years, reducing or straight-line basis
Furniture | 5 to 10 years, reducing or straight-line basis
IT hardware | 3 to 7 years, reducing or straight-line basis
Software | 3, 5 or 10 years, straight-line basis

Assets held under finance lease
The assets held under the leasing activity are recognised in accordance with the accounting rules defined by the notice n° 2006-C of
4 October 2006 issued by the Emergencies Committee, linked to the interpretation of the advisory opinion n° 2004-15 du 23 June 2004 of CNC,
relating to the definition, recognition and valuation of assets excluding from individual company accounts lease contracts according to IFRS16
within the scope of articles 211-1 to 224-4 from the regulation n° 2014-03 of ANC.
Assets held under leasing activity are amortised by using the straight-line method, over the actual duration of use but not exceeding the duration
of the rental contract.
The amortisation periods considered are as follows:
– furniture and office equipment: five years;
– computer equipment: three years; and
– tools and equipment: five to seven years.
Depreciation of fixed assets leased under finance leases are recognised as an expense on finance lease.
In the financial accounting, the outstanding financial contracts is substituted to the net leased fixed-assets. The difference between the
outstanding amounts of financial assets and the net book value of fixed assets is represented by the gross unearned finance income.

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(j)Exceptional items
This line only includes profit and losses before tax which are generated or occur exceptionally and do not relate to the banking current activity
and where relevant, the correction of material errors identified.
(k)Deferred taxation
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the balance sheet and the amount
attributed to such assets and liabilities for tax purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent it is probable that future taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred tax is calculated using the tax rates expected to apply in the periods in which the assets will be realised or the liabilities settled.
(l)Segment reporting
This information is not available on the parent company accounts but details are provided on a consolidated basis in the management report.

2 Loans and advances to banks

Breakdown of outstanding loans by remaining contractual maturity
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 28,381 | 22,634
Loan and advance centralised at the ‘Caisse des Dépôts et Consignations’ presented net against regulated savings accounts | 10 | 10
Netting on reverse repurchase agreements | 46,274 | 31,880
Total before netting – Gross | 74,665 | 54,524
On demand deposits | 2,924 | 3,051
Term deposits | 71,560 | 51,303
≤ 3 months | 68,323 | 49,735
> 3 months and ≤ 1 year | 1,570 | 103
> 1 year and ≤ 5 years | 1,560 | 1,238
> 5 years | 107 | 227
Accrued interests | 181 | 170
Total | 74,665 | 54,524
– of which: |  |
securities received under reverse repurchase agreements | 65,531 | 46,490
subordinated loans | — | —

3 Loans and advances to customers

Breakdown of outstanding loans by type
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 43,454 | 53,373
Netting on reverse repurchase agreements | 9,662 | 5,287
Total before netting – Gross | 53,116 | 58,660
Commercial loans | 2,705 | 2,609
Overdraft | 3,492 | 3,420
Other customer facilities | 46,919 | 52,631
Total | 53,116 | 58,660
– of which: |  |
eligible loans for European Central Bank or Banque de France refinancing | 2,875 | 3,533
reverse repurchase agreements | 20,001 | 16,718

Breakdown of outstanding loans by credit quality
| 31 Dec 2025 | 31 Dec 2024
| Performing loans | Non-performing loans | Impairment on non-performing loans | Total | Total
| €m | €m | €m | €m | €m
Retail loans | 1 | 9 | (3) | 7 | 5,997
Loans to financial customers | 6,275 | 156 | (39) | 6,392 | 5,724
Loans to non-financial customers | 25,882 | 977 | (372) | 26,487 | 29,905
Reverse repurchase agreements | 20,001 | — | — | 20,001 | 16,718
Accrued interests | 223 | 6 | — | 229 | 316
Total | 52,382 | 1,148 | (414) | 53,116 | 58,660
– of which: |  |  |  |  |
subordinated loans |  |  |  | — | —
gross non-performing loans |  |  |  | 1,058 | 1,360
gross impaired loans |  |  |  | 90 | 77
impairment on gross non-performing loans |  |  |  | (361) | (297)
impairment on gross impaired loans |  |  |  | (53) | (37)

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Breakdown of outstanding loans by remaining contractual maturity
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Repayable on demand | 4,157 | 3,917
Term deposits | 48,730 | 54,427
≤ 3 months | 22,899 | 18,264
> 3 months and ≤ 1 year | 5,796 | 6,480
> 1 year and ≤ 5 years | 17,603 | 21,075
> 5 years | 2,432 | 8,608
Accrued interest | 229 | 316
Total | 53,116 | 58,660

4 Portfolios of trading, available-for-sale and held-to-maturity securities

| 31 Dec 2025 | 31 Dec 2024
| Carrying amount | Carrying amount
| €m | €m
Treasury bills and money-market instruments | 43,193 | 29,557
– Trading securities | 25,558 | 19,561
– Available-for-sale securities | 12,610 | 9,519
– Held-to-maturity securities | 4,927 | 399
– Accrued interest | 98 | 78
– of which: securities borrowed presented net against corresponding liabilities | 1,206 | 2,131
Treasury bills and money-market instruments after netting | 41,987 | 27,426
Bonds and other fixed income securities | 13,251 | 11,864
Trading account securities | 4,306 | 1,707
– quoted securities | 4,306 | 1,707
– unquoted bonds, interbank market securities and tradable debt securities | — | —
Available-for-sale securities | 8,001 | 9,280
– quoted bonds | 5,905 | 6,884
– unquoted bonds, interbank market securities and tradable debt securities | 2,096 | 2,396
Held-to-maturity securities | 879 | 812
– quoted bonds | — | —
– unquoted bonds, interbank market securities and tradable debt securities | 879 | 812
Accrued interest | 65 | 65
– of which: |  |
subordinated debt | — | 100
securities borrowed | 287 | 101
Equities and other variable income securities | 7,063 | 6,415
Trading account securities | 6,973 | 6,320
– quoted shares | 6,904 | 6,271
– unquoted shares and similar | 69 | 49
Available-for-sale securities | 80 | 85
– quoted shares | — | —
– unquoted shares and similar | 80 | 85
Portfolio activity securities | 10 | 10
– quoted portfolio activity shares | — | —
– unquoted portfolio activity shares | 10 | 10
Total | 63,507 | 47,836

Breakdown by remaining contractual maturity of treasury bills and bonds
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Treasury bills and money-market instruments |  |
≤ 3 months | 1,588 | 1,890
> 3 months and ≤ 1 year | 8,077 | 2,292
> 1 year and ≤ 5 years | 17,240 | 10,636
> 5 years | 16,190 | 14,661
Accrued interest | 98 | 78
Total | 43,193 | 29,557
Bonds and other fixed income securities |  |
≤ 3 months | 2,542 | 2,292
> 3 months and ≤ 1 year | 1,605 | 1,389
> 1 year and ≤ 5 years | 6,435 | 5,865
> 5 years | 2,604 | 2,253
Accrued interest | 65 | 65
Total | 13,251 | 11,864

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Estimated value of available for sale portfolio activity
| 31 Dec 2025 | 31 Dec 2024
| Net carrying amount | Estimated | Net carrying amount | Estimated
| €m | €m | €m | €m
Treasury bills and money-market instruments | 12,610 | 12,768 | 9,519 | 9,640
Bonds and other fixed income securities | 8,001 | 8,013 | 9,280 | 9,232
Equities and other variable income securities | 10 | 12 | 10 | 14
Total available-for-sale and portfolio activity securities (excluding related receivables) | 20,621 | 20,793 | 18,809 | 18,886

The financial investments portfolio is made up mainly of fixed income securities for which the interest-rate risk is usually hedged. The portfolio
valuation rules are given in Note 1(a).

Unrealised gains and losses in financial investments and portfolio equities
| 31 Dec 2025
| Before provisions | Provisions | Net amount
| €m | €m | €m
Unrealised gains in available-for-sale and portfolio equities | 252 | — | 252
– treasury bills and other eligible bills | 207 | — | 207
– bonds and other fixed-income securities | 43 | — | 43
– equity shares and similar & portfolio equities | 2 | — | 2
Unrealised losses in available-for-sale and portfolio equities | 102 | 22 | 80
– treasury bills and other eligible bills | 60 | 11 | 49
– bonds and other fixed-income securities | 40 | 9 | 31
– equity shares and similar & portfolio equities | 2 | 2 | —

Additional information on the securities in compliance with ANC 2014-07
regulation dated 26 November 2014
The premium (unamortised difference between the acquisition price and the redemption price of securities) of available-for-sale and held-to-
maturity securities amounted to EUR 259.6 million in 2025 and EUR 93.8 million in 2024.
No security was transferred from one portfolio to another portfolio in 2025 or in 2024. Also no held-to-maturity securities have been sold during
the period.

5 Investments in subsidiaries, affiliates and equity securities held for long
term

| 31 Dec 2025 | 31 Dec 2024
| Net carrying amount | Net carrying amount
| €m | €m
Interests in subsidiaries and associates | 35 | 33
Listed securities | — | —
– banks | — | —
– others | — | —
Non-listed securities | 35 | 33
– banks | 6 | 6
– others | 29 | 27
Other long-term securities | 29 | 29
Listed securities | — | —
– banks | — | —
– others | — | —
Non-listed securities | 29 | 29
– banks | — | —
– others | 29 | 29
Interests in group companies | 1,358 | 1,878
Listed securities | 204 | —
– banks | 204 | —
– others | — | —
Non-listed securities | 1,154 | 1,878
– banks | 501 | 705
– others 1 | 653 | 1,173
Accrued income |  |
Total | 1,422 | 1,940

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| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Gross amount at 1 January (excluding advances and accrued income) | 2,297 | 2,493
Changes in the year: |  |
– acquisitions of securities/share issues | — | 22
– disposals/capital reductions 1 | (520) | (218)
– effect of foreign exchange differences | — | —
– other movements/merger | — | —
Gross amount at 31 December (excluding advances and accrued interests) | 1,777 | 2,297
Impairment at 1 January | (357) | (294)
Changes in the year: |  |
– new allowances | — | (235)
– release of allowances no longer required | 2 | 172
– other movements | — | —
– effect of foreign exchange differences | — | —
Impairment at 31 December | (355) | (357)
Accrued income | — | —
Net book value including accrued interests | 1,422 | 1,940

1 This includes the sale of investment in French life insurance business, HSBC Assurances Vie (France), f or EUR 514 million.

6 Intangible assets

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Gross amount at 1 January | 464 | 534
Changes in the year: |  |
– transfers and other movements 1 | 154 | (4)
– fixed asset acquisitions | 160 | 58
– fixed asset disposals and other changes | (4) | (124)
Gross amount value at 31 December | 774 | 464
Amortisation at 1 January | 351 | 452
Changes in the year: |  |
– charges for the period for amortisation and impairment 2 | 129 | 28
– transfers and other movements 1 | 60 | —
– fixed asset disposals and other changes | (17) | (129)
Amortisation at 31 December | 523 | 351
Net book value of intangible assets at 31 December | 251 | 113

1 Mainly related to the capitalisation of internally developed software costs of EUR 154 million (gross). These costs met the criteria for recognition as an asset but
had been expensed rather than capitalised and immediately impaired when incurred as the impairment test on non‑financial assets indicated a carrying amount
lower than the value in use (as at 31 December 2024: gross value: EUR 154 million; accumulated amortisation: EUR 59 million; impairment: EUR 95 million).
From 1 January 2025, following revised operating segment structure in HSBC Continental Europe and improved cash‑flow projections, impairment test indicated
EUR 95 million impairment reversal, recognised as an exceptional item (see Note 30).
2 Include impairment in the German Branch for EUR 51 million.

7 Tangible assets and finance leases

Tangible assets | 31 Dec 2025 | 31 Dec 2024
| €m | €m
Gross amount at 1 January | 391 | 710
Changes in the year: |  |
– transfers and other movements | — | —
– fixed asset acquisitions | 14 | 8
– fixed asset disposals and other changes | (3) | (327)
Carrying amount at 31 December | 402 | 391

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Depreciation at 1 January | 307 | 613
Changes in the year: |  |
– charges for the period for depreciation and impairment 1 | 39 | 25
– transfers and other movements | 1 | —
– fixed asset disposals and other changes | (10) | (331)
Depreciation at 31 December | 337 | 307
Net carrying amount at 31 December | 65 | 84

1 Include impairment in the German Branch for EUR 19 million.

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Breakdown by type of tangible fixed assets
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Operating land and buildings | 8 | 8
Non-operating land and buildings | — | —
Other tangible assets | 57 | 76
Carrying amount at 31 December | 65 | 84

Finance leases
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Assets under construction | — | —
Assets in use gross amount 1 | 97 | 206
Assets in use amortisation | (86) | (174)
Accrued interests | — | —
Total | 11 | 32

1 Comprise of infrastructure and other machinery for EUR 48 million, vehicles for EUR 30 million and other material for EUR 19 million.
At 31 December 2025, the financial outstanding amounts to EUR 15 million (EUR 42 million in 2024) and the provision for negative unearned
finance income before deferred tax to EUR 3 million (EUR 9 million in 2024).

8 Loan impairment

| Balance at 1 Jan 2025 | Additions | Amounts utilised | Unused amounts reversed | Other movements | Balance at 31 Dec 2025
| €m | €m | €m | €m | €m | €m
Impairment on bank and other customer non-performing loans (excluding doubtful interest) | 334 | 207 | (78) | (49) | 1 | 415
Impairment on securities | — | — | — | — | — | —
Provisions for loans commitments | 38 | 26 | (8) | (24) | — | 32
Total of impairment and provisions recognised in cost of risk | 372 | 233 | (86) | (73) | 1 | 447

Loan impairment charges
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Net impairment charge for the period: |  |
– interbank and customer non-performing and impaired receivables (excluding doubtful interest) | (172) | (109)
– counterparty risk on securities | — | —
– loan commitments | (6) | (10)
– recoveries of amounts previously written off | 1 | 2
Total loan impairment charges | (177) | (117)
– of which: |  |
unprovided losses on non-performing and impaired receivables | (5) | (58)
unprovided losses on loan commitments | — | —
losses covered by provisions | (86) | (348)

9 Other assets

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 14,922 | 20,755
Netting on cash collateral associated with derivatives | 8,192 | 2,312
Total before netting | 23,114 | 23,067
– of which: |  |
settlement of securities transactions | 376 | 319
sundry debtors and other receivables | 22,738 | 22,748

10 Prepayments and accrued income

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 39,796 | 39,056
Netting on derivatives | 13,538 | 14,834
Netting on cash collateral associated with derivatives | 421 | —
Total before netting | 53,754 | 53,890
– of which: |  |
items in course of collection from other banks | 49 | 70
other assets 1 | 53,705 | 53,820

1 Including mark-to-market on derivatives instruments for EUR 51,812 million in 2025 (EUR 52,112 million in 2024).

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11 Deposits due to credit institutions

Breakdown of deposits by remaining contractual maturity
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 26,926 | 20,276
Netting on repurchase agreements | 46,274 | 31,880
Total before netting | 73,200 | 52,156
On demand deposits | 13,952 | 10,694
Term deposits | 59,138 | 41,359
≤3 months | 11,350 | 7,909
>3 months and ≤ 1 year | 531 | 529
>1 year and ≤5 years | 46,681 | 32,379
>5 years | 576 | 542
Accrued interest | 110 | 103
Total | 73,200 | 52,156
– of which: repurchase agreements | 56,594 | 38,926

12 Customer accounts

Breakdown of customer credit balances by type of deposit
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 105,258 | 97,977
Loan and advance centralised at the ‘Caisse des Dépôts et Consignations’ presented net against regulated savings accounts | 10 | 10
Netting on repurchase agreements | 9,662 | 5,287
Total before netting | 114,930 | 103,274
On demand deposits | 52,005 | 50,611
Special demand accounts | 32 | 48
Special term accounts | — | —
Term accounts | 48,883 | 41,811
Total customer deposits (excluding repurchase agreements) | 100,920 | 92,470
Repurchase agreements | 13,828 | 10,596
Accrued interest | 182 | 208
Total customer credit balance accounts | 114,930 | 103,274

Breakdown of customer credit balances by remaining contractual maturities
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
On demand deposits | 52,036 | 50,659
Term deposits | 62,712 | 52,407
≤3 months | 57,493 | 48,747
>3 months and ≤1 year | 4,994 | 3,148
>1 year and ≤5 years | 53 | 346
>5 years | 172 | 166
Accrued interest | 182 | 208
Total | 114,930 | 103,274

13 Debt securities in issue

Breakdown of debt securities by type |  |
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Certificates of deposit | — | —
Interbank market securities and tradable debt securities | 9,835 | 9,860
Bonds | 14,915 | 15,587
Accrued interest | 410 | 374
Total | 25,160 | 25,821

Breakdown of debt securities by maturity
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Debt securities | 24,750 | 25,447
≤3 months | 3,887 | 2,541
>3 months and ≤1 year | 2,807 | 4,187
>1 year and ≤5 years | 10,933 | 10,121
>5 years | 7,123 | 8,598
Accrued interest | 410 | 374
Total | 25,160 | 25,821

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Notes on the parent company financial statements

14 Provisions

| Balance at 1 Jan 2025 | Additions | Amounts utilised | Unused amounts reversed | Other movements | Balance at 31 Dec 2025
| €m | €m | €m | €m | €m | €m
Provisions for commitments and disputes | 39 | 26 | (8) | (23) | (1) | 33
Other provisions 1 | 231 | 270 | (36) | (32) | 2 | 435
Total | 270 | 296 | (44) | (55) | 1 | 468

1 Additions mainly due to the restructuring provisions : EUR 156 million for France, EUR 63 million for German Branch and EUR 12 million for other branches.
Please refer to section 2025 Highlights on page 265 for more details.

15 Other liabilities

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 45,937 | 38,296
Netting on cash collateral associated with derivatives | 421 | 2,312
Assets arising from securities borrowing transactions deducted from corresponding liabilities | 1,206 | 2,131
Total before netting | 47,564 | 42,739
– of which: |  |
securities transactions settlement accounts | 44 | 314
sundry creditors 1 | 18,693 | 16,788
short position and securities received under repurchase agreements confirmed resold | 28,827 | 25,637

1 Including cash collateral on financial instruments received in 2025: EUR 18,113 million compared to EUR 13,782 million in 2024.

16 Accruals and deferred income

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Total after netting | 30,423 | 36,563
Netting on derivatives | 13,538 | 14,834
Netting on cash collateral associated with derivatives | 8,192 | —
Total before netting | 43,961 | 51,397
– of which: |  |
items in course of transmission to other banks | 32 | 29
other liabilities 1 | 52,120 | 51,368

1 Including mark-to-market on derivatives instruments (before netting) for EUR 51,144 million in 2025 and EUR 50,321 million in 2024.

17 Subordinated debt
Subordinated debts are dated or undated loans or securities, for which repayment is subordinated to other creditors in case of liquidation.
Accrued interest, if any, on these subordinated securities is recognised in the balance sheet in an accrued interest account with a corresponding
amount recognised in profit and loss.

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Dated subordinated securities | — | 25
Undated subordinated securities | — | 16
Subordinated debts (dated and undated) | 3,335 | 3,335
Accrued interest | 34 | 31
Total | 3,369 | 3,407

Securities issued by HSBC Continental Europe
Subordinated securities issued by HSBC Continental Europe, in euros and other currencies, are liabilities which will only be repaid in the event of
liquidation after the interests of other creditors have been extinguished but before repayment of the holders of participating securities or equity.

Subordinated securities
| Date of issue | Date of maturity | Interest type | Currency of issue | 31 Dec 2025 | 31 Dec 2024
€m | €m
Dated subordinated securities 1 | 07.07.2005 | 07.07.2025 | Fixed rate | EUR | — | 10
08.07.2005 | 08.07.2025 | Fixed rate | EUR | — | 5
25.06.2002 | 26.06.2028 | Fixed rate | EUR | — | 10
Undated subordinated securities 1 | 22.07.1985 | perpetual | TMO – 0.25 | FRF | — | 16
Accrued interest | — | —
Total (including accrued interest)1 | — | 41

1 In 2025, full repayment of subordinated securities.

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Notes on the parent company financial statements

Subordinated debts
Subordinated debts | Date of issue | Date of maturity | Interest type | Currency of issue | 31 Dec 2025 €m | 31 Dec 2024 €m
Undated debts 1 | 26.05.2017 | perpetual | Fixed rate | EUR | 200 | 200
| 28.03.2018 | perpetual | Fixed rate | EUR | 300 | 300
| 18.12.2024 | perpetual | Fixed rate | EUR | 250 | 250
| 18.03.2022 | perpetual | Floating rate | EUR | 250 | 250
| 06.12.2016 | perpetual | Floating rate | EUR | 235 | 235
| 23.01.2019 | perpetual | Fixed rate | EUR | 200 | 200
Dated debts 2 | 22.05.2020 | 22.05.2030 | Floating rate | EUR | — | 500
| 08.12.2023 | 08.12.2034 | Floating rate | EUR | 200 | 200
| 29.01.2024 | 29.01.2035 | Floating rate | EUR | 400 | 400
| 21.03.2024 | 21.03.2035 | Floating rate | EUR | 300 | 300
| 10.12.2024 | 10.12.2036 | Floating rate | EUR | 500 | 500
| 22.05.2025 | 22.05.2036 | Floating rate | EUR | 500 | —
Accrued interest |  |  |  |  | 34 | 31
Total for securities issued by HSBC Continental Europe (including accrued interest) | 3,369 | 3,366

1 Additional Tier 1: A total or a partial repayment is allowable on or after call date under certain conditions except two debts issued in 2016 and 2019 by the
German branch amounting to EUR 435 million where only total repayment is possible.
2 Tier 2: A total or a partial repayment is allowable on or after the call date under certain conditions.
u More details are available in HSBC Continental Europe Pillar 3 Disclosures.

18 Share capital

| 2025 | 2024
Shares with a nominal value of 5 euros | Number of shares | Total (in thousands of euros) | Number of shares | Total (in thousands of euros)
At 1 January | 265,583,192 | 1,327,916 | 212,466,555 | 1,062,333
– subscription options exercised | — | — | — | —
– new capital issued − merger | — | — | 53,116,637 | 265,583
– reduction of capital | — | — | — | —
At 31 December | 265,583,192 | 1,327,916 | 265,583,192 | 1,327,916

Voting rights
On 31 December 2025, the total of voting rights stood at 265,583,192.

19 Equity

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Called-up share capital | 1,328 | 1,328
Share premium account (Additional paid-in capital) | 7,291 | 7,291
Reserves | 1,113 | 1,088
– legal reserve | 110 | 85
– long-term gains reserve | 405 | 405
– revaluation reserve | 3 | 3
– extraordinary and other reserve | 305 | 305
– free reserve | 290 | 290
– revaluation reserve on past service costs | — | —
Retained earnings 1 | 2,280 | 1,808
Interim dividend | (282) | —
Special tax-allowable reserves | — | —
Net profit for the year | (66) | 499
Equity | 11,664 | 12,014

1 Before proposed allocation of any dividend and/or legal reserves for current year.

Changes in equity
| 2025
| €m
Balance at 1 January | 12,014
Net profit for the year | (66)
Capital increase | —
Share premium increase | —
Interim dividend 1 | (282)
Others | (2)
Balance at 31 December | 11,664

1 Interim dividend of EUR 282 million paid in October 2025.

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Notes on the parent company financial statements

Legal reserve
This reserve is built up by appropriating at least one-twentieth of the year’s profit. This appropriation ceases to be mandatory once this reserve
reaches one-tenth of share capital. It is not distributable.
Net long-term gains reserve
Distributing this reserve would lead to an additional tax charge equal to the difference between standard tax rate and reduced tax rate.
Revaluation reserve (1976 revaluation)
This reserve could be incorporated into capital, but it cannot be distributed or used to offset losses.
Other reserves
Amounts put into reserves over five years ago would be subject to a levy if they were to be distributed.
For distributions paid on or after 1 January 2000, HSBC Continental Europe can charge the dividends against profits liable to corporate income
tax for accounting periods ended at most five years ago, starting with the oldest, in application of the decree of 21 December 1999.

20 Pensions and other post-retirement benefits

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Provision for employee-related commitments | (48) | 10

Principal actuarial assumptions of the post-employment defined benefit plans
The principal actuarial financial assumptions used to calculate the defined benefit pension plans were:

France (in %) | Discount rate | Inflation rate | Rate of increase for pensions in payment and deferred pensions | Rate of pay increase
At 31 Dec 2025 | 3.50 | 2.00 | 2.00 | 2.85
At 31 Dec 2024 | 3.25 | 2.00 | 2.00 | 2.92

Germany (in %) | Discount rate | Inflation rate | Rate of increase for pensions in payment and deferred pensions | Rate of pay increase
At 31 Dec 2025 | 4.12 | 2.10 | 2.10 | 2.10
At 31 Dec 2024 | 3.41 | 2.25 | 2.25 | 2.25

HSBC Continental Europe determines discount rates in consultation with its actuaries based on the current average yield of high quality (AA-
rated) debt instruments, with maturities consistent with that of the defined benefit obligation.

Provision recognised
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Present value of benefit obligations | 324 | 373
Fair value of plan assets | (372) | (363)
Net liability/asset recognised | (48) | 10

The components of the table below have been recognised in profit & loss.

Net liability/asset under defined benefit pension plans
| Fair value of plan assets | Present value of defined benefit obligations | Net benefit liability/asset
| €m | €m | €m
Net defined benefit liability at 1 January 2025 | (363) | 373 | 10
Current service cost | — | (5) | (5)
Net interest (income)/cost on the net defined benefit liability | (11) | 12 | 1
Remeasurement effects | 1 | (22) | (21)
Benefits paid | 1 | (18) | (17)
Other | — | (16) | (16)
At 31 Dec 2025 | (372) | 324 | (48)

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Notes on the parent company financial statements

Fair value of plan assets by asset classes
| 31 Dec 2025
| Fair value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC
| €m | €m | €m | €m
Fair value of plan assets | (372) | 362 | 10 | —
– equities | (3) | 3 | — | —
– bonds | (227) | 227 | — | —
– property | — | — | — | —
– derivatives | — | — | — | —
– other | (142) | 132 | 10 | —

21 Off-balance sheet items

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
A – Loan commitments |  |
Commitments given | 61,224 | 60,036
Refinancing agreements and other financing commitments in favour of banks | 8,933 | 8,327
Refinancing agreements and other financing commitments in favour of customers | 52,291 | 51,709
– confirmed credit facilities | 52,212 | 51,646
– acceptances payable and similar instruments | 79 | 63
Commitments received | 522 | 1,052
Refinancing agreements and other financing commitments in favour of banks | 522 | 1,052
B – Guarantee commitments |  |
Commitments given | 20,632 | 19,273
– guarantees, acceptances and other securities to banks | 3,636 | 3,216
– guarantees, acceptances and other securities to customers | 16,996 | 16,057
Commitments received | 697 | 7,379
– guarantees, acceptances and other securities 1 | 697 | 7,379

1 Mainly driven by the sale of the retained portfolio of French home and other loans.

Other pledged assets
| 31 Dec 2025
| €m
Covered bonds | —
Loans pledged on guarantee 3G (Gestion Globale des Garanties) and TRICP (Traitement Informatique des Créances Privées) | 2,875
Loans pledged on guarantee CCBM (Correspondent Central Banking Model) | —
Securities pledged on guarantee | 4,026
Total | 6,901

22 Derivatives

| 31 Dec 2025 | 31 Dec 2024
| Fair value | Hedging contracts 1 | Trading contracts 1 | Total 1 | Fair value | Hedging contracts 1 | Trading contracts 1 | Total 1
| €bn | €bn | €bn | €bn | €bn | €bn | €bn | €bn
Fixed terms contracts | 8.9 | 35 | 4,539 | 4,574 | 2.0 | 34 | 5,193 | 5,227
Exchange traded | — | — | 115 | 115 | — | — | 99 | 99
– interest rate | — | — | 83 | 83 | — | — | 69 | 69
– exchange rate | — | — | 10 | 10 | — | — | 14 | 14
– equity | — | — | 22 | 22 | — | — | 16 | 16
Non-exchange traded | 8.9 | 35 | 4,424 | 4,459 | 2.0 | 34 | 5,094 | 5,128
– forwards contracts | — | — | 416 | 416 | — | — | 627 | 627
– other interest rate | 9.3 | 35 | 2,918 | 2,953 | 1.8 | 34 | 3,368 | 3,402
– other exchange rate | (0.1) | — | 183 | 183 | (0.1) | — | 172 | 172
– other contracts | (0.3) | — | 907 | 907 | 0.3 | — | 927 | 927
Flexible Terms (with Options) contracts | (2.2) | — | 449 | 449 | (1.4) | — | 497 | 497
Exchange traded | (0.9) | — | 178 | 178 | (0.8) | — | 191 | 191
– interest rate | — | — | — | — | — | — | — | —
– exchange rate | — | — | 81 | 81 | — | — | 94 | 94
– other contracts | (0.9) | — | 97 | 97 | (0.8) | — | 97 | 97
Non-exchange traded | (1.3) | — | 271 | 271 | (0.6) | — | 306 | 306
– Caps and floors | (0.2) | — | 77 | 77 | — | — | 98 | 98
Swaptions and options | (1.1) | — | 194 | 194 | (0.6) | — | 208 | 208
– bought | (1.1) | — | 99 | 99 | (0.6) | — | 109 | 109
– sold | — | — | 95 | 95 | — | — | 99 | 99
Total derivatives | 6.7 | 35 | 4,988 | 5,023 | 0.6 | 34 | 5,690 | 5,724

1 Notional contract amounts.

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Notes on the parent company financial statements

Other information on interest rate derivatives
| 31 Dec 2025 | 31 Dec 2024
Notional contract amounts | €bn | €bn
Micro hedge contract 1 | 9 | 8
Macro hedge contract 2 | 26 | 26
Trading | 2,918 | 3,368
Other | — | —

1 Interest rate swaps accounted as micro-hedging are used to hedge interest and currency rate risk of an asset or a liability.
2 Interest rate swaps accounted as macro-hedging are used to hedge and to manage the global interest rate risk of portfolio of assets and liabilities of the bank.

Derivatives: maturity analysis
| 31 Dec 2025
| ≤1 year | >1 year and ≤ 5 years | > 5 years | Total
(in billion euro) | €bn | €bn | €bn | €bn
Derivatives: |  |  |  |
– Exchange contracts | 59 | 300 | 19 | 378
– Interest rate contracts | 1,186 | 1,362 | 1,149 | 3,697
– Others | 977 | (32) | 3 | 948
Total | 2,222 | 1,630 | 1,171 | 5,023

Risk-weighted assets – Amount of Exposure At Default (’EAD‘) for derivatives contracts
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
A – Contracts concluded under Master agreement with close-out netting | 9,973 | 12,378
1. Transactions with banks from OECD countries | 9,414 | 11,901
2. Transactions with customers and banks localised outside OECD countries | 559 | 477
B – Other contracts | 2,478 | 2,579
1. Transactions with banks from OECD countries | 2,422 | 2,545
– interest rate contracts | 242 | 254
– exchange contracts | 1,181 | 1,241
– equity derivatives contracts | 849 | 893
– credit derivatives contracts | 1 | 1
– commodities contracts | 149 | 156
2. Transactions with customers and banks localised outside OECD countries | 56 | 34
– interest rate contracts | — | —
– exchange contracts | 56 | 34
– equity derivatives contracts | — | —
Total Exposure at Defaut | 12,451 | 14,957
Corresponding risk-weighted assets (‘RWA’) | 4,014 | 4,488

Clearing effect on Exposure at Default
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Original exposure before credit risk mitigation (including close-out netting) | 126,665 | 108,652
Exposure mitigation due to close-out netting | (113,392) | (93,025)
Exposure mitigation due to credit mitigation | (822) | (670)
Exposure value after credit risk mitigation | 12,451 | 14,957

23 Net interest income

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Interest and similar income |  |
Banks and financial institutions | 3,208 | 4,818
Customers | 2,810 | 3,051
Bonds and other fixed-income securities | 999 | 937
Total | 7,017 | 8,806
Interest and similar expenses |  |
Banks and financial institutions | (1,832) | (2,806)
Customers | (3,190) | (3,645)
Subordinated liabilities | (174) | (206)
Other bonds and fixed-income securities | (1,060) | (1,287)
Total | (6,256) | (7,944)

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Notes on the parent company financial statements

24 Income from equities and other variable income securities

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Income |  |
Available-for-sale and similar & portfolio activity securities | 17 | 16
Interests in subsidiaries and associates and other long-term securities | — | —
Interests in group companies | 69 | 603
Total | 86 | 619

25 Commissions received and commissions paid

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Fees |  |
Income | 1,521 | 1,429
On transactions with banks | 126 | 123
On transactions with customers | 126 | 126
On foreign exchange transactions | 24 | 21
On primary securities market activities | 300 | 307
On provision of services for third parties | 626 | 527
On commitments | 264 | 260
Other commission | 55 | 65
Expenses | (766) | (635)
On transactions with banks | (78) | (69)
On corporate actions | (488) | (379)
On forward financial instrument activities | (1) | —
On provision of services for third parties | (166) | (164)
On commitments | (6) | (8)
Other commission | (27) | (15)
Total fees | 755 | 794

26 Gains or losses on trading securities

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Gains or losses |  |
Trading securities | 1,319 | 419
Foreign exchange transactions | 417 | 353
Others Derivatives | (804) | (118)
Total | 932 | 654

27 Gains or losses on available-for-sale securities

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Available-for-sale securities |  |
Gains or losses | 16 | (48)
Impairment | 59 | (43)
– charges | (70) | (168)
– releases | 129 | 125
Available-for-sale securities (portfolio activity) |  |
Gains or losses | — | 1
Impairment | — | —
– charges | — | —
– releases | — | —
Total | 75 | (90)

28 General operating expenses

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Employee compensation and benefits |  |
Salaries and wages, social security, taxes and levies on compensation | (791) | (757)
Pension expense | (72) | (76)
Profit sharing and incentive plan | (12) | (10)
Employee compensation and benefits total | (875) | (843)
Other administrative expenses | (1,233) | (948)
Total operating expenses | (2,108) | (1,791)

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Notes on the parent company financial statements

Share award plans
At 31 December 2025, allowance stood at EUR 13.64 million.

29 Gains or losses on disposals of fixed assets and long term investments

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Gains or losses on held-to-maturity securities | — | —
Gains or losses on tangible and intangible fixed assets 1 | 146 | (115)
Gains or losses on investments in subsidiaries and associates, long-term securities and other group companies 2 | 453 | (234)
Total | 599 | (349)

1 Primarily driven by the sale of the private banking operations in Germany in 2025.
2 Include the pre-tax gain on sale of the French life insurance business, HSBC Assurances Vie (France) for EUR 450 million in 2025.

30 Exceptional items

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Exceptional gain/loss |  |
Gain/Loss on sale of major line of business 1 | (1,056) | 9
Impairment on tangible assets and costs of investment | — | —
Disposal costs | — | 4
Correction of error 2 | 95 | —
Others | — | —
Total | (961) | 13

1 Mainly driven by the sale of the retained portfolio of French home and other loans.
2 Impact of the error correction related to the capitalisation of intangible assets described in Note 6.

31 Current and deferred tax

| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Current tax |  |
At standard rate | (172) | (119)
At reduced rate | — | —
Deferred tax | 177 | (174)
Total | 5 | (293)

Deferred taxes are calculated according to the principles defined in Note 1.
The France rates used for the calculation of taxes are as follows and is based on tax rates applicable to the corresponding fiscal year.

| 2026 | 2025 | 2024
| % | % | %
Standard rate 1 | 25.00 | 25.00 | 25.00
Reduced rate (long term capital gains)2 | 3.1 | 3.1 | 3.1
Reduced rate (gains on disposal of shares in listed real estate companies)3 | 19.0 | 19.0 | 19.0
Reduced rate (venture capital vehicle)3 | 15.0 | 15.0 | 15.0
Tax contribution |  |  |
CSB | 3.3 | 3.3 | 3.3
Exceptional contribution | — | — | —
Deferred tax |  |  |
Standard rate on DT if assumption of recovery on 2025 | 25.00 | 25.00 | 25.00
Standard rate on DT if assumption of recovery on 2026 | 25.00 | 25.00 | 25.00
Standard rate on DT if assumption of recovery on 2027 | 25.00 | 25.00 | 25.00
Standard rate on DT if assumption of recovery on 2028 | 25.00 | 25.00 | 25.00
Reduced rate on DT if assumption of recovery on 2025 | 3.1 | 3.1 | 3.1
Reduced rate on DT if assumption of recovery on 2026 | 3.1 | 3.1 | 3.1
Reduced rate on DT if assumption of recovery on 2027 | 3.1 | 3.1 | 3.1
Reduced rate on DT if assumption of recovery on 2028 | 3.1 | 3.1 | 3.1

1 Standard CIT rate of 25 per cent excluding CSB of 3.3 per cent.
2 According to the French tax regulations, the capital gains resulting from the disposal of shares recorded as participations shares under French GAAP and held for
at least two years, are taxable in France at an effective tax rate of 3.1 per cent (i.e.,12 per cent of the capital gain at a standard rate of 25.83 per cent).
3 The regime applies subject to specific conditions.
HSBC Continental Europe's profits are taxed at different rates depending on the country in which the profits arise. The largest tax balances
relate to France where the applicable corporate income tax for 2024 and 2025 was 25 per cent and the social contribution tax (CSB) remain at
3.3 per cent based on the Corporate Income Tax, leading to an effective tax rate of 25.83 per cent.
The final effective tax rate varies depending on the contribution from entities outside of France, notably Germany which has an income tax rate
for fiscal year 2025 of 31.4 per cent and other European branches. Enacted in the 2025 German Finance Act, the corporate income tax rate will
reduce by 1 per cent each year beginning in 2028 until 2032 resulting in a total reduction of 5 per cent.

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Notes on the parent company financial statements

An exceptional surtax on corporate income tax was introduced by the French Finance Act 2025 for companies with turnover of at least
EUR 1 billion. Although the French tax group’s revenue exceeded this threshold in 2025, it is not subject to the surtax due to negative tax
results for the 2024 and 2025 financial years.
The 2026 French Finance Act extends the surtax for a further year. For 2026, a rate of 20.6 per cent will apply to companies with turnover
between EUR 1.5 billion and EUR 3 billion, and 41.2 per cent for those with turnover exceeding EUR 3 billion.
Current tax
The 2025 current tax expense reflected a tax charge of EUR 172 million (2024: EUR 119 million), mainly explained by the tax expense reported
by HSBC Continental Europe branches of EUR 195 million (2024: EUR 160 million), of which notably EUR 101 million reported by Germany, EUR
30 million reported by Netherlands, EUR 20 million reported by Ireland, EUR 19 million reported by Luxembourg. These tax charges are offset by
a tax credit in France of EUR 24 million.
Deferred tax
The 2025 deferred tax credit was EUR 177 million (2024: EUR 174 million charge), driven mainly by the deferred tax credit in HSBC Continental
Europe France entity of EUR 134 million, including the recognition of a EUR 100 million deferred tax asset on brought forward losses.
The net deferred tax asset accounted for in the balance sheet as at December 31, 2025 amounts to EUR 834 million against EUR 658 million as
at December 31, 2024. This net deferred tax asset is composed of EUR 672 million in France, EUR 155 million in Germany and EUR 7 million in
the rest of HSBC Continental Europe European branches.
The France net deferred tax asset of EUR 672 million is majorly driven by brought forward tax losses from previous years of EUR 601 million
(2024: EUR 501 million). During 2025, management reassessed the likely availability of future taxable profits against which to recover the
deferred tax assets of the French tax group, taking into consideration the reversal of existing taxable temporary differences, the drivers of past
business performance, management’s latest forecasts of future business performance and forecasting uncertainty. These tax losses have no
expiry date and are forecast to be recovered in 10 years.
Unrecognised deferred tax
The French tax group has unrecognised deferred tax of EUR 313 million tax value (EUR 1,210 million gross value) at 31 December 2025 (2024:
EUR 177 million (EUR 685 million gross value)).

32 Legal proceedings and regulatory matters relating to HSBC Group entities
generally
HSBC Group entities, including HSBC Continental Europe, are party to various legal proceedings and regulatory matters arising out of their
normal business operations. Apart from the matters described below and in the section ‘Legal risks and litigation management’ on pages 175 to
176 of the Universal Registration Document 2025, HSBC Continental Europe considers that none of these matters is significant. HSBC
Continental Europe recognises a provision for a liability in relation to these matters when it is probable that an outflow of economic benefits will
be required to settle an obligation which has arisen as a result of past events, and for which a reliable estimate can be made of the amount of
the obligation. Any provision recognised does not constitute an admission of wrongdoing or legal liability. While the outcome of these matters is
inherently uncertain, management believes that, based on the information available to it, appropriate provisions, as necessary, have been made
in respect of such legal proceedings as at 31 December 2025.
Bernard L. Madoff Investment Securities LLC
Various HSBC companies that provided custodial, administration and similar services to a number of funds whose assets were invested with
Bernard L. Madoff Investment Securities LLC (‘Madoff Securities’) have been named as defendants in lawsuits arising out of Madoff Securities’
fraud. HSBC Institutional Trust Services (Ireland) DAC (‘HTIE’) and/or its subsidiary Somers Dublin DAC (‘Somers’) face claims alongside other
HSBC companies.
On 1 August 2018, HSBC Continental Europe acquired from HSBC Bank plc 100 per cent of the shares of HTIE. Pursuant to the terms of the
Sale and Purchase Agreement, HSBC Continental Europe and/or its subsidiaries will be indemnified by HSBC Bank plc in respect of certain
liabilities relating to the activities of HTIE and/or Somers. (HTIE subsequently merged into HSBC Continental Europe Dublin Branch).
The Madoff Securities trustee (the ‘Trustee’) has brought lawsuits in the US against various HSBC companies, including Somers, seeking
recovery of alleged transfers from Madoff Securities to the HSBC companies in the amount of $508m (plus interest). In September 2025, the
US Bankruptcy Court for the Southern District of New York dismissed certain claims (not relating to Somers) in the amount of $324m. The
Trustee has appealed. The Trustee’s remaining claims (including those against Somers) which amount to $184m are pending.
The Trustee has filed a claim against various HSBC companies, including HTIE, in the High Court of England and Wales seeking recovery of
alleged transfers from Madoff Securities to the HSBC companies. The claim has not yet been served and the amount claimed has not been
specified.
Tax-related investigations
Since 2023, the French National Financial Prosecutor (‘PNF’) had been investigating HSBC Continental Europe and the Paris branch of HSBC
Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading activities. In January 2026,
HSBC Bank plc reached an agreement with the PNF to resolve its investigation. HSBC Bank plc paid a total of €302m and this matter is now
closed. The investigation into HSBC Continental Europe was closed with no further action.
HSBC Bank plc and the German branch of HSBC Continental Europe continue to cooperate with investigations by the German public prosecutor
into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain trading activities.

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Notes on the parent company financial statements

Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any
possible impact on HSBC, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Continental Europe and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for
information, investigations and reviews by various tax authorities, regulators, competition and law enforcement authorities, as well as legal
proceedings including litigation and other contentious proceedings in connection with various matters arising out of its businesses and
operations.
At the present time, HSBC Continental Europe does not expect the ultimate resolution of any of these matters to be material to its financial
position. However, given the uncertainties involved in legal proceedings and regulatory matters, there can be no assurance regarding the
eventual outcome of a particular matter or matters.

33 Presence in non-cooperative states or territories
HSBC Continental Europe does not hold any direct or indirect presence in any non-cooperative States or territories in accordance with the article
238-0 A of the General Tax Code.

34 Events after the balance sheet date
At its meeting on 24 February 2026, the Board of Directors resolved to distribute a dividend of EUR 5.20 per share (representing a total payout
of approximately EUR 1.4 billion) in respect of the 2025 financial year. This dividend, if approved by shareholders at the Combined General
Meeting, will be payable after deducting the interim dividend of EUR 1.06 per share already paid to shareholders in respect of the 2025 financial
year.
There have been no other significant events between 31 December 2025 and the date of approval of these financial statements by the Board of
Directors which would require an adjustment or additional disclosure in the financial statements.

35 Other information
35.1 Inter ests in subsidiaries and related parties at 31 December 2025

(in thousands of euros unless otherwise stated) | Legal status | Business | Share capital | Reserves + retained earnings before appropria- tion of net profit | Owner- ship interest per cent | Book value of securities held | Loans and advances granted by HSBC Conti- nental Europe | Guara- ntees given by HSBC Conti- nental Europe | Current year sales | Current year net profit or loss | Dividends received by HSBC Conti- nental Europe in the last financial year
Cost | Net
A – Information on companies whose book value at cost exceeds 1 per cent of HSBC Continental Europe’s share capital
1 – Subsidiaries (over 50 per cent) |  |  |  |  |  |  |  |  |  |
HSBC Factoring (France) 38, avenue Kléber – 75116 Paris (France) | Limited company (SA) | Factoring | 9,240 | 161,161 | 99.99 | 39,236 | 39,236 | 2,951,363 | — | 111,258 | 20,485 | —
Société Française et Suisse, 38, avenue Kléber – 75116 Paris (France) | Limited company (SA) | Invest- ment company | 599 | 8,789 | 100.00 | 60 384 | 9,676 | — | — | — | 108 | —
SAPC UFIPRO Recouvrement 38, avenue Kléber – 75116 Paris (France) | Limited liability company (SARL) | Dept collecting company | 7,619 | 1,554 | 99.98 | 16,262 | 9,168 | — | — | — | (6) | —
HSBC Global Asset Management (France) Immeuble Coeur Défense–110 esplanade du Général de Gaulle – 92400 Courbevoie (France) | Limited company (SA) | Asset manage- ment | 8,050 | 61,895 | 100.00 | 153,967 | 153,967 | — | — | 206,938 | 14,380 | 10,063
HSBC Services (France) 38, avenue Kléber – 75116 Paris (France) | Limited company (SA) | Commer- cial company | 2,242 | 456 | 100.00 | 36,877 | 1,970 | — | — | — | (12) | —
Valeurs Mobilières Elysées , 38, avenue Kléber – 75116 Paris (France) | Limited company (SA) | Limited company (SA) | 41,920 | 12,044 | 100.00 | 67,757 | 55,180 | — | — | — | 1 204 | —
HLF 38, avenue Kléber – 75116 Paris (France) | Simplified joint-stock company (SA) | Leasing | 168,528 | 108,677 | 100.00 | 281,756 | 281,756 | 7,323 | — | — | 21,187 | 20,780

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Notes on the parent company financial statements

(in thousands of euros unless otherwise stated) | Legal status | Business | Share capital | Reserves + retained earnings before appropria- tion of net profit | Owner- ship interest per cent | Book value of securities held | Loans and advances granted by HSBC Conti- nental Europe | Guara- ntees given by HSBC Conti- nental Europe | Current year sales | Current year net profit or loss | Dividends received by HSBC Conti- nental Europe in the last financial year
Cost | Net
SFM 38, avenue Kléber – 75116 Paris (France) | Limited company (SA) | Holding company | 11,987 | 15,889 | 100.00 | 25,201 | 25,201 | — | — | — | 10,905 | —
Foncière Elysées S.A. 38, avenue Kléber – 75116 Paris (France) | Simplified joint-stock company (SAS) | Real estate | 14,043 | 5,758 | 100.00 | 44,478 | 28,464 | — | — | 199 | 146 | —
Charterhouse Management Services Ltd 8 Canada Square – London E14 5HQ (Royaume-Uni) | Limited company under English law | Invest- ment company | 11,439 | — | 100.00 | 11,460 | 11,460 | — | — | 544 | 415 | —
HSBC Real Estate Leasing (France), 38, avenue Kléber – 75116 Paris (France) | Limited company (SA) | Créditbail immobilier | 38,255 | 62,852 | 80.98 | 37,190 | 37,190 | — | — | 78,171 | 3,042 | —
CCF & Partners Asset Management Ltd 8 Canada Square – London E14 5HQ (Royaume-Uni) | Limited company under English law | Invest- ment holding | 1 | — | 100.00 | — | — | — | — | — | (616) | 613
HSBC Bank Malta p.l.c. 116 Archbishop Street, Valletta, Malta | Public Limited Company (SA) | Commerc- ial banking, Insurance and Assets manage- ment | 108,092 | 511,920 | 70.03 | 203,875 | 203,875 | — | — | 222,251 | 71,592 | 36,082
HSBC Private Bank (Luxembourg) S.A. 18 Bd de Kockelscheuer, 1821 Gasperich Luxembourg | Limited Company (SA) | Private banking | 160,000 | 64,421 | 100.00 | 195,000 | 195,000 | 780,000 | 451,000 | 48,165 | (14,943) | —
B – Aggregate data concerning companies whose book value at cost does not exceed 1 per cent of HSBC Continental Europe’s share capital
1 – Subsidiaries
a) French subsidiaries (aggregated) | — |  | — | — | — | — | — | — | — | — | — | —
b) Foreign subsidiaries (aggregated) | — |  | — | — | — | — | — | — | — | — | — | —
2 – Related party companies |  |  |  |  |  |  |  |
a) French companies (aggregated) | — |  | — | — | — | 4 | — | — | — | — | — | —
b) Foreign companies (aggregated) | — |  | — | — | — | — | — | — | — | — | — | —

35.2 Transactions with subsidiaries and other related parties

| 31 Dec 2025
| Subsidiaries | Other related parties
| €m | €m
Assets |  |
Treasury bills and money-market instruments | — | 4,571
Loans and advances to banks | 3,242 | 5,275
Loans and advances to customers | — | 3,700
Bonds and other fixed income securities | — | 32
Liabilities |  |
Due to credit institutions | 440 | 16,518
Customer accounts | 286 | 303
Debt securities | — | —
Other liabilities | — | 3,899
Subordinated liabilities | — | 2,895
Off-balance sheet items |  |
Financing commitments given | 2,216 | 25
Guarantees and endorsements given | — | 2,103
Securities commitments (other commitments given) | — | —

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Statutory Auditors‘ report on the financial statements

PricewaterhouseCoopers Audit | BDO Paris
63, rue de Villiers | 43-47, avenue de la Grande-Armée
92208 Neuilly-sur-Seine Cedex France | 75116 Paris France

Statutory Auditors‘ report on the
financial statements
(For the year ended 31 December 2025)
To the Shareholders,
HSBC Continental Europe
38, avenue Kléber
75116 Paris, France
Opinion
In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying financial statements
of HSBC Continental Europe for the year ended 31 December 2025.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company at 31
December 2025 and of the results of its operations for the year then ended in accordance with French accounting principles.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for opinion
Audit framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit of the
financial statements” section of our report.
Independence
We conducted our audit engagement in compliance with the independence rules provided for in the French Commercial Code (Code de
commerce) and the French Code of Ethics (Code de déontologie) for Statutory Auditors for the period from January 1, 2025 to the date of our
report, and, in particular, we did not provide any non-audit services prohibited by article 5(1) of Regulation (EU) No. 537/2014.
Emphasis of matter
Without qualifying our opinion, we draw your attention to the matter set out in Note 30 “Exceptional items” to the financial statements which
indicates the error correction of €95 million relative to the accounting treatment of internally designed software.
We also draw your attention to the impact of the first-time application of ANC Regulation 2022-06, as described in the notes to the financial
statements.
Justification of assessments – Key audit matters
In accordance with the requirements of articles L.821-53 and R.821-180 of the French Commercial Code relating to the justification of our
assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in our professional judgement, were
the most significant in our audit of the financial statements, as well as how we addressed those risks.
These matters were addressed as part of our audit of the financial statements as a whole, and therefore contributed to the opinion we formed
as expressed above. We do not provide a separate opinion on specific items of the financial statements.

Impairment of loans and advances to non-financial customers
Description of risk | How our audit addressed this risk
At 31 December 2025, gross loans to non-financial customers amounted to EUR 26,487 million. The associated impairment losses amounted to EUR 372 million. In assessing impairment, management uses its judgement in particular with regard to: – the classification of outstanding loans into doubtful and non-performing loans, based in particular on the internal rating system; – assessing the recoverability of these loans. We deemed this impairment relative to non-financial customers to be a key audit matter as it requires significant judgement on the part of management when preparing the consolidated financial statements, particularly given the current economic and geopolitical climate. | In response to this risk, we tested the controls we deemed key to our audit, in order to assess the relevance of the impairment losses estimated. Our tests therefore focused on the design and effectiveness of controls relating to the assessment of these impairments, including in particular the internal rating system, the classification of loans and the approval of individual impairments recognised. With the help of our credit risk experts, we tested the appropriateness of the methods and policies used to determine allowances, using a sample of loans selected based on risk level. Based on this sample, we independently assessed the level of allowances recognised. We also assessed the appropriateness of the information relating to the impairment of loans and receivables due from customers.

u See Notes 1.b and 3 to the financial statements.

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Statutory Auditors‘ report on the financial statements

Recognition of deferred tax assets with respect to tax loss carryforwards
Description of risk | How our audit addressed this risk
At 31 December 2025, net deferred tax assets from the French tax consolidation group amounted to EUR 672 million in HSBC Continental Europe's financial statements, of which EUR 601 million were deferred tax assets with respect to tax loss carryforwards. The valuation and recoverability of the deferred tax assets resulting from these tax loss carryforwards depend mainly on: – the taxable profit that HSBC Continental Europe expects to generate in the future; – the French tax legislation applicable to the recognition and use of deferred tax assets arising from HSBC Continental Europe’s tax loss carryforwards in France. The valuation and future use of deferred tax assets on tax loss carryforwards is based on significant judgements from management. These judgements relate primarily to forecasts of tax profit or loss, the duration of tax losses, and the feasible tax planning strategies available. Accordingly, given the significance of the amount of deferred tax assets at 31 December 2025 and the estimates and judgements made by management in recognising these deferred tax losses, we deemed them to be a key audit matter for HSBC Continental Europe’s financial statements. | In response to this risk, our procedures consisted in: – testing the controls in place with respect to the calculation and recognition of deferred tax assets on tax loss carryforwards; – performing a critical review, with the help of our tax experts, of the assumptions used by management to estimate the recoverable amount of the estimated deferred tax assets on tax loss carryforwards at the year end. Our work consisted primarily in: – testing the key inputs used to estimate deferred tax with respect to tax loss carryforwards, including cash flow forecasts for plans approved by the Board of Directors, – assessing management's estimates of forecasts of tax profit or loss by reviewing the temporary and permanent differences from prior years that are reflected in future forecasts, – assessing the appropriateness of the sensitivity analyses carried out by HSBC Continental Europe to estimate deferred tax assets on tax loss carryforwards. Lastly, we assessed the appropriateness of the disclosures in the notes to the financial statements.

u See Notes 1.k and 31 to the financial statements.

Recognition of disposals and restructuring provisions
Description of risk | How our audit addressed this risk
As part of its transformation plan to refocus on institutional and corporate clients, HSBC Continental Europe is in the process of disposing certain non- strategic portfolios and businesses. In addition, as part of this strategic reworking, HSBC Continental Europe launched plans to restructure its workforce in 2025, mainly in France and Germany. HSBC Continental Europe completed the following disposals in 2025: – disposal of the portfolio of real estate loans and other loans with a carrying amount of EUR 7.1 billion, resulting in a pre-tax loss of EUR 1.1 billion; – disposal of the insurance business, resulting in a pre-tax gain of EUR 450 million; – disposal of the private banking business in Germany, resulting in a pre-tax gain of EUR 149 million. These transactions require management to exercise judgement, particularly with regard to the valuation of assets and liabilities sold and disclosures in the notes to the financial statements. At 31 December 2025, restructuring provisions amounted to EUR 231 million. The measurement of these provisions is based on significant assumptions and judgements by management, particularly with regard to the estimation of severance payments, the probability of departure and the valuation of other costs directly attributable to the restructuring. Given the complexity of the disposals, the restructuring plans and the level of judgement exercised to assess the impacts on the financial statements as at 31 December 2025, we deemed these transactions to be a key audit matter. | Regarding the disposals, our procedures consisted primarily in: – assessing the appropriateness of the main judgements made by management, in particular in valuing the assets and liabilities sold; – testing the exhaustiveness and accuracy of assets and liabilities sold and the profit or loss recognised. With the help of our experts, our procedures with regard to restructuring provisions consisted in: – assessing the reasonableness of the methodologies and assumptions used to estimate the provisions recognised, particularly with regard to the specific social security legislation in force in France and Germany and the agreements negotiated; – assessing compliance with the criteria for recognising restructuring provisions; – using samples to test the data used to calculate provisions. Finally, we assessed the appropriateness of the disclosures in the notes to the financial statements relating to disposals and restructuring provisions.

u See “2025 Highlights” section and Notes 14, 29 and 30 to the financial statements.
Specific verifications
In accordance with professional standards applicable in France, we have also performed the specific verifications required by French legal and
regulatory provisions.
Information given in the management report and in the other documents provided to the shareholders with respect to the
Company’s financial position and the financial statements
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the Board
of Directors’ management report and in the other documents provided to the shareholders with respect to the Company’s financial position and
the financial statements, with the exception of the following matter.
Concerning the fair presentation and the consistency with the financial statements of the information about payment terms referred to in article
D.441-6 of the French Commercial Code, we have the following matter to report:
As indicated in the management report, this information does not include banking transactions and related transactions, as the Company has
decided that such transactions do not fall within the scope of the required information.
Report on corporate governance
We attest that the corporate governance section of the Board of Directors’ management report sets out the information required by articles
L.225-37-4 and L.22-10-10 of the French Commercial Code.

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Other verifications and information pursuant to legal and regulatory requirements
Presentation of the financial statements to be included in the annual financial report
In accordance with professional standards applicable to the Statutory Auditors’ procedures for annual and consolidated financial statements
presented according to the European single electronic reporting format, we have verified that the presentation of the financial statements to be
included in the annual financial report referred to in paragraph I of article L.451-1-2 of the French Monetary and Financial Code (Code monétaire
et financier) and prepared under the Chief Executive Officer’s responsibility, complies with this format, as defined by European Delegated
Regulation No. 2019/815 of 17 December 2018.
On the basis of our work, we conclude that the presentation of the financial statements to be included in the annual financial report complies, in
all material respects, with the European single electronic reporting format.
It is not our responsibility to ensure that the financial statements to be included by the Company in the annual financial report filed with the AMF
correspond to those on which we carried out our work.
Appointment of the Statutory Auditors
We were appointed Statutory Auditors of HSBC Continental Europe by the Annual General Meetings held on 23 April 2015 for
PricewaterhouseCoopers Audit and on 10 May 2007 for BDO Paris.
At 31 December 2025, PricewaterhouseCoopers Audit and BDO Paris were in the eleventh and the nineteenth consecutive year of their
engagement, respectively.
Responsibilities of management and those charged with governance for the financial
statements
Management is responsible for preparing financial statements giving a true and fair view in accordance with French accounting principles, and
for implementing the internal control procedures it deems necessary for the preparation of financial statements that are free of material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting, unless it expects to liquidate the
Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management
systems, as well as, where applicable, any internal audit systems relating to accounting and financial reporting procedures.
The financial statements were approved by the Board of Directors.
Responsibilities of the Statutory Auditors relating to the audit of the financial statements
Objective and audit approach
Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements
as a whole are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
taken by users on the basis of these financial statements.
As specified in article L.821-55 of the French Commercial Code, our audit does not include assurance on the viability or quality of the Company’s
management.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise professional
judgement throughout the audit. They also:
– identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, design and perform audit
procedures in response to those risks, and obtain audit evidence considered to be sufficient and appropriate to provide a basis for their opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control;
– obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
– evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management and the
related disclosures in the notes to the financial statements;
– assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may
cause the Company to cease to continue as a going concern. If the Statutory Auditors conclude that a material uncertainty exists, they are
required to draw attention in the audit report to the related disclosures in the financial statements or, if such disclosures are not provided or are
inadequate, to issue a qualified opinion or a disclaimer of opinion;
– evaluate the overall presentation of the financial statements and assess whether these statements represent the underlying transactions and
events in a manner that achieves fair presentation.

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Statutory Auditors‘ report on the financial statements

Report to the Audit Committee
We submit a report to the Audit Committee which includes, in particular, a description of the scope of the audit and the audit programme
implemented, as well as the results of our audit. We also report any significant deficiencies in internal control that we have identified regarding
the accounting and financial reporting procedures.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgement, were the most significant for
the audit of the financial statements and which constitute the key audit matters that we are required to describe in this report.
We also provide the Audit Committee with the declaration provided for in article 6 of Regulation (EU) No. 537/2014, confirming our
independence within the meaning of the rules applicable in France, as defined in particular in articles L.821-27 to L.821-34 of the French
Commercial Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our independence and
the related safeguard measures with the Audit Committee.

Neuilly-sur-Seine and Paris, 25 February 2026
The Statutory Auditors
PricewaterhouseCoopers Audit | BDO Paris
Amel Hardy-Ben Bdira | Vincent Génibrel

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Allocation of net profit

Allocation of net profit

| At
| 31 Dec 2025 | 31 Dec 2024
| €m | €m
Results available for distribution |  |
– retained earnings 1 | 2,280 | 1,808
– net profit for the year | (66) | 499
Total (A) | 2,214 | 2,307
Allocation of income |  |
– dividends 2 | 1,381 | —
– free reserve | — | —
Total (B) | 1,381 | —
Retained earnings (A-B) | 833 | 2,307

1 The retained earning variation is explained by the allocation to the legal reserve of EUR 25 million out of 2024 profits.
2 Subject to shareholders’ approval, the dividend will be payable from 27 March 2026, after deduction of the interim dividend of EUR 1.06 per share voted by the
Board of Directors at its meeting of 19 November 2025 and paid to the 265,583,192 shares issued as of that date.
Five-year highlights
(Articles R. 225-81 and R. 225-102 of the French Commercial Code)

| 2025 | 2024 | 2023 | 2022 | 2021
| €m | €m | €m | €m | €m
Share capital at year end |  |  |  |  |
Called up share capital | 1,328 | 1,328 | 1,062 | 1,062 | 491
Number of issued shares | 265,583,192 | 265,583,192 | 212,466,555 | 212,466,555 | 98,231,196
Nominal value of shares in euros | 5 | 5 | 5 | 5 | 5
Results of operations for the year |  |  |  |  |
Sales | 9,807 | 11,611 | 9,751 | 4,242 | 3,228
Profit before tax, depreciation and provisions | 97 | 1,005 | 703 | (352) | (2,042)
Profit after tax, depreciation and provisions | (66) | 499 | 671 | 275 | (1,589)
Per share data (in euros) |  |  |  |  |
Profit after tax, but before depreciation and provisions | 0.4 | 2.7 | 2.2 | (0.3) | (15.8)
Profit after tax, depreciation and provisions | (0.2) | 1.9 | 3.2 | 1.3 | (16.2)
Dividend paid per ordinary share, eligible as of 1 January | 5.20 | — | — | — | —
Employees (France) |  |  |  |  |
Number of employees 1 | 6,394 | 6,869 | 10,511 | 11,122 | 7,993
Average number of employees (excluding employees available) | 6,624 | 6,986 | 10,770 | 8,342 | 8,338
Salaries and wages | 641 | 614 | 662 | 641 | 629
Employee benefits | 188 | 187 | 246 | 230 | 245
Payroll and other taxes | 24 | 22 | 31 | 36 | 63
Incentive schemes and/or employee profit-sharing scheme 2 | 13 | 11 | 6 | — | —

1 Employees registered as at 31 December of each year.
2 Based on previous year’s profits.

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Allocation of net profit

List of equity shares and debt securities held at 31 December 2025 (excluding
trading securities)

Held-on maturity, available-for-sale and portfolio activity securities
| 31 Dec 2025
| €m
A – Held-to-maturity securities | 880
Debt securities | 880
Treasury bills and other eligible bills | —
Other public sector securities | —
Money market instruments | —
Negotiable certificates of deposit | —
Negotiable medium-term notes | —
Bonds and similar assets | 880
Accrued interest | —
B – Available-for-sale and portfolio activity securities | 20,864
Debt securities | 20,774
Treasury bills and other eligible bills | —
Other public sector securities | 12,611
Money market instruments | —
Commercial paper | —
Negotiable certificates of deposit | —
Negotiable medium-term notes | —
Asset-backed securities | —
Bonds and similar | 8,001
Negotiable medium-term notes issued by banks | —
Accrued interest | 162
Equity shares | 90
Equity shares and similar | 90
Mutual fund units | —
Total held-to-maturity, available-for-sale and portfolio activity securities | 21,744

Interests in related parties, other participating interests and long-term securities
| 31 Dec 2025
| €m
A – Other participating interest and long-term securities | 64
Securities listed on a recognised French exchange | —
Unlisted French securities | 64
Foreign securities listed on a recognised French exchange | —
Foreign securities listed elsewhere | —
Unlisted foreign securities | —
Accrued income | —
B – Interests in related parties | 1,358
Listed French securities | —
Unlisted French securities | 948
Listed foreign securities | —
Unlisted foreign securities | 410
Accrued income | —
Total interests in related parties, other participating interests and long-term securities | 1,422

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Additional Information

HSBC Continental Europe’s principal
subsidiaries and investment policy
HSBC Continental Europe’s principal subsidiaries at 31 December 2025
Corporate and Institutional Banking

Distribution | HSBC Factoring (France) (100 per cent)

Real estate | Foncière Elysées (100 per cent)
| HSBC Real Estate Leasing (France) (100 per cent)

Asset Management

| HSBC Global Asset Management (France) (100 per cent)
| HSBC REIM (France) (100 per cent)
| HSBC Global Asset Management (Deutschland) GmbH (100 per cent)
| HSBC Global Asset Management (Malta) Limited (70.03 per cent)

Insurance

| HSBC Life Assurance (Malta) Limited (70.03 per cent)

Private Banking

| HSBC Private Bank (Luxembourg) S.A. (100 per cent)

Other subsidiaries and equity investments

| Valeurs Mobilières Elysées (100 per cent)
| SFM (100 per cent)
| HLF (100 per cent)
| Société Française et Suisse (100 per cent)
| Charterhouse Management Services Ltd (100 per cent)
| HSBC Bank Malta p.l.c. (70.03 per cent)

Stated percentages indicate the group’s percentage of control.
The subsidiaries are classified in the area where they principally operate.

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Additional Information

Summary business activities of HSBC Continental Europe’s principal
subsidiaries at 31 December 2025
Corporate and Institutional Banking
(in thousands of euros)

| Total assets | Shareholders’ funds | Net profit | HSBC Continental Europe group’s percentage
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
HSBC Factoring (France) | 3,957,850 | 3,561,491 | 219,602 | 199,084 | 20,485 | 19,743 | 100 | 100
HSBC Factoring France ('HFF') is a company dedicated to Receivables Finance.
HSBC Real Estate Leasing (France) | 465,679 | 534,371 | 104,149 | 101,107 | 3,042 | 1,981 | 100 | 100
HSBC Real Estate Leasing France provides real estate services. The company offers professional, industrial, and commercial premises on leases, as well as acquisition, financing, and borrowing services.

Asset Management
(in thousands of euros)

| Total assets | Shareholders’ funds | Net profit | HSBC Continental Europe group’s percentage
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
HSBC Global Asset Management (France) | 213,889 | 207,186 | 84,326 | 80,008 | 14,380 | 13,925 | 100 | 100
HSBC Global Asset Management France ('HGAM') is an asset management division of the HSBC Group, it develops and manages investment management products.
HSBC REIM (France) | 19,395 | 19,844 | 13,715 | 12,526 | 3,733 | 4,576 | 100 | 100
HSBC REIM (France) is the subsidiary of the Asset Management business specialising in real estate management on behalf of third parties.
HSBC Global Asset Management (Malta) Limited | 3,794 | 3,341 | 2,855 | 2,601 | 254 | 162 | 70.03 | 70.03
HSBC Global Asset Management (Malta) Limited is the investment solutions provider of the HSBC Group in Malta. It is a wholly owned subsidiary of HSBC Bank Malta p.l.c. (‘HBMT’ or ‘the Bank’) and is regulated by the Malta Financial Services Authority. It has an Investment Services Licence and is principally engaged in the asset management of Collective Investments Schemes and Discretionary Portfolio Mandates.
HSBC Global Asset Management (Deutschland) GmbH | 74,967 | 70,340 | 13,651 | 13,651 | (15,524) | 3,633 | 100 | 100
HSBC Global Asset Management (Deutschland) GmbH ('AMDE') is active in financial portfolio management, investment advice and the distribution of national and international HSBC funds. It specializes in the development and distribution of fund and advisory concepts for institutional clients, corporate clients and financial intermediaries in Germany and Austria.

Insurance
(in thousands of euros)

| Total assets | Shareholders’ funds | Net profit | HSBC Continental Europe group’s percentage
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
HSBC Life Assurance (Malta) Limited | 771,747 | 755,785 | 62,403 | 56,994 | 5,409 | 19,565 | 70.03 | 70.03
HSBC Life Assurance (Malta) Ltd is authorised by the Malta Financial Services Authority to carry on the business of insurance in Malta under the Insurance Business Act (chapter 403, Laws of Malta). It offers a range of protection and investment life assurance products distributed mainly through HSBC Bank Malta p.l.c. which is enrolled as a tied insurance intermediary for HSBC Life Assurance (Malta) Ltd under the Insurance Distribution Act (chapter 487,Laws of Malta) .

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Own investments
(in thousands of euros)

| Total assets | Shareholders’ funds | Net profit | HSBC Continental Europe group’s percentage
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
Société Française et Suisse (‘SFS’) | 9,498 | 9,392 | 9,496 | 9,388 | 108 | (86) | 100 | 100
Société Française et Suisse is a subsidiary that holds investments from former closed HSBC Continental Europe subsidiaries.
Valeurs Mobilières Elysées | 55,336 | 54,509 | 55,167 | 53,964 | 1,204 | 2,168 | 100 | 100
Valeurs Mobilières Elysées is a subsidiary in which investments in shares were made for its own account. These investments concerned mid-sized listed stocks and Private Equity funds. The HSBC Group decided, in 2009, to no longer take on new operations on medium-sized listed securities, Valeurs Mobilières Elysées manages a portfolio in extinction. There are no more new investments in Private Equity on the balance sheet of Valeurs Mobilières Elysées.
HLF | 395,841 | 397,185 | 298,393 | 297,985 | 21,187 | 20,811 | 100 | 100
HLF is a company specialised in lease finance for major corporates. The company holds subsidiaries intended for leasing activities with a call option. It operates more particularly in the aeronautics sector by financing assets on behalf of airlines.

Private Banking
(in thousands of euros)

| Total assets | Shareholders’ funds | Net profit | HSBC Continental Europe group’s percentage
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
HSBC Private Bank (Luxembourg) S.A. | 3,093,961 | 3,306,198 | 209,478 | 223,622 | (14,943) | (17,589) | 100 | 100
HSBC Private Bank (Luxembourg) S.A provides an enhanced range of private banking solutions for entrepreneurs by utilising an extensive network of experts to provide tailored and personalised solutions backed by strong local expertise. The bank is authorised under Luxembourg law to conduct all banking operations and insurance brokerage activity. The bank has one branch located in Paris, France.

Entities domiciled outside France
(in thousands of euros)

| Total assets | Shareholders’ funds | Net profit | HSBC Continental Europe group’s percentage
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024
HSBC Bank Malta p.l.c. | 7,431,457 | 7,043,239 | 591,154 | 573,694 | 12,894 | 45,956 | 70.03 | 70.03
The bank provides a comprehensive range of banking and financial related services. The bank is authorised to carry on the business of banking, under the Banking Act, 1994 as a credit institution. It is also a licensed financial intermediary in terms of the Financial Markets Act, 1990. The bank is also licensed by the Malta Financial Services Authority in terms of the Investment Services Act, 1994. These licences authorise the bank to provide investment services to third parties and custodian services for collective investment schemes respectively.

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Investment policy
2019
– Acquisition by HSBC Continental Europe of certain assets and liabilities held by HSBC Bank plc in the Netherlands, Spain, Ireland, Czech
Republic, Italy, Belgium and in Luxembourg.
– Amount of the investment: EUR 370.3 million.
2020
– No material transactions to report.
2021
– No material transactions to report.
2022
– Acquisition by HSBC Continental Europe on 30 November 2022:
– 100 per cent of HSBC Trinkaus & Burkhardt GmbH from HSBC Bank plc for an acquisition price of EUR 1,191 million; and
– 70.03 per cent of HSBC Bank Malta p.l.c. from HSBC Europe BV for an acquisition price of EUR 204 million.
– Sale of the Private Banking: on 1 October 2022, HSBC Continental Europe transferred its Private Banking business in France to HSBC Private
Bank (Luxembourg) SA. The sale was executed with a Net Asset Value transferred of EUR 1, 525 million.
2023
– On 30 June 2023, HSBC Continental Europe completed the transfer of activities and staff from HSBC Trinkaus & Burkhardt GmbH to HSBC
Germany.
– HSBC Continental Europe acquired 100 per cent of the share capital of HSBC Private Bank (Luxembourg) S.A. from HSBC Private Bank (Suisse)
SA, for an acquisition price of EUR 195 million.
2024
– On 1 January 2024, HSBC Continental Europe completed the sale of its retail banking operations in France to CCF, a subsidiary of Promontoria
MMB SAS (‘My Money Group’). The sale also included: HSBC Continental Europe’s 100 per cent ownership interest in HSBC SFH (France) and
its 3 per cent ownership interest in Crédit Logement.
– On 29 November 2024, HSBC Continental Europe completed the sale of HSBC Epargne Enterprise to Natixis Interépargne, a subsidiary of
Group BPCE.
2025
– On 31 October 2025, HSBC Continental Europe completed the sale of its French life insurance business, HSBC Assurances Vie (France), to
Matmut Société d’Assurance Mutuelle.

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Additional Information

Proposed resolutions to the Combined
General Meeting to be held on 27 March
2026
First resolution
Voting under the quorum and majority conditions to transact ordinary
business, and having heard and considered the report of the
Directors, the Statutory Auditors' report on the financial statements
for the year ended 31 December 2025, and the report on corporate
governance and the Statutory Auditors’ report relating thereto, the
shareholders hereby approve the company’s financial statements for
that year as presented, together with the business operations
reflected therein and summarised in the reports.

Second resolution
Voting under the quorum and majority conditions to transact ordinary
business, the shareholders, having noted that the year ended
31 December 2025 shows a net result of EUR – 66,329,345.44,
hereby approve the proposed distribution of this net result made by
the Board of Directors and resolve to appropriate it as follows:

Net result for the year | EUR – 66,329,345.44
Plus retained profits | EUR 2,279,834,227.40
Total sum available for distribution | EUR 2,213,504,881.96

To be distributed as follows:

Dividend of EUR 5.20 per share |
to be paid | EUR 1,381,032,598.40
Retained earnings | EUR 832,472,283.56

The dividend will be payable from 27 March 2026, after deduction of
the interim dividend of EUR 1.06 per share voted by the Board of
Directors at its meeting of 23 October 2025 and paid to the
265,583,192 shares issued as of that date.
Dividend paid is eligible for the tax deduction referred to in article 158
paragraph 3.2 of the General Tax Code.
In accordance with legal requirements, it is recalled that no dividend
has been paid in respect of the three previous financial years.

Third resolution
Voting under the quorum and majority conditions to transact ordinary
business, and having heard and considered the report of the Directors
and the report of the Statutory Auditors regarding the consolidated
statements for the year ended 31 December 2025, the shareholders
hereby approve the consolidated financial statements for that year as
presented.

Fourth resolution
Voting under the quorum and majority conditions to transact ordinary
business, and having heard and considered the Statutory Auditors’
report on regulated agreements governed by article L. 225-38 of the
French Commercial Code, the shareholders hereby approve
successively the agreements described therein under the conditions
referred to in article L. 225-40 of said Code.
Fifth resolution
Voting under the quorum and majority conditions to transact ordinary
business, in accordance with article L. 511-73 of the French Monetary
and Financial Code, the shareholders hereby issue a favourable
opinion on the aggregate amount of compensation of all kinds paid in
2025 to categories of personnel as referred to in Article L 511-71 of
the French Monetary and Financial Code having a significant impact
on risks, which amounts to EUR 118,089,834.

Sixth resolution
Voting under the quorum and majority conditions to transact ordinary
business, and noting that the term of office of Mrs Lucile Ribot
expires at the end of this meeting, the shareholders hereby elect, to
replace her, Mr Madhukar Dayal as a Director of the Company, for a
term of three years ending at the conclusion of the Annual General
Meeting held to approve the financial statements for the year ending
31 December 2028.

Seventh resolution
Voting under the quorum and majority conditions to transact ordinary
business, the shareholders hereby re-elect Mr Jean Beunardeau, who
is retiring by rotation, as Director for a further term of three years
ending at the conclusion of the Annual General Meeting held to
approve the financial statements for the year ending 31 December
2028.

Eighth resolution
Voting under the quorum and majority conditions to transact ordinary
business, the shareholders hereby re-elect Mrs Deirdre Hannigan,
who is retiring by rotation, as Director for a further term of three years
ending at the conclusion of the Annual General Meeting held to
approve the financial statements for the year ending 31 December
2028.

Ninth resolution
Voting under the quorum and majority conditions to transact ordinary
business, the shareholders hereby re-elect Mrs Carol Sergeant, who
is retiring by rotation, as Director for a further term of three years
ending at the conclusion of the Annual General Meeting held to
approve the financial statements for the year ending 31 December
2028.

Tenth resolution
Voting under the quorum and majority conditions to transact special
business, having heard and considered the report of the Directors and
the special report of the Statutory Auditors, the shareholders hereby
authorise the Board of Directors to increase the share capital on one

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or more occasions at the time or times it deems appropriate up to a
maximum amount of EUR 500 million (issue premium included), it
being stipulated that are not included in the limit of EUR 500 million
above, the capital increases which could be decided in respect of the
dividend payments in shares or which would result from the exercise
of stock options by employees.
Should the Board of Directors decide to use this authority, it may
implement the capital increase at its discretion either by capitalising
earnings, reserves or share premiums by means of an increase in the
nominal value of existing shares or by means of a bonus issue of new
shares identical in all respects to the existing shares, or by issuing
new shares for cash or by way of a set-off, with preferential rights in
favour of existing shareholders, or by a combination of both
procedures either successively or simultaneously.
In the event of a capital increase by issuing new shares for cash, the
Board of Directors is specifically authorised to:
– give those shareholders who applied for a greater number of shares
than their entitlement as of right preference over any securities not
taken up under the shareholders’ preferential rights, scaled back in
the event that applications exceed the number of shares
available ;and
– limit the capital increase to the amount of applications received,
provided that such amount represents at least three quarters of the
initial proposed capital increase.
The shareholders hereby empower the Board of Directors to
complete the capital increase or increases, if it deems appropriate, to
fix the terms and conditions thereof and notably the issue price of the
shares, the dividend entitlement date, which may be retrospective,
and the opening and closing dates for applications, to officially record
the capital increase and alter the Articles of Association accordingly,
and, more generally, to take all measures and fulfil all formalities
required to complete the operation.
This authority is valid for a period of 26 months with effect from the
date of this meeting. It cancels and supersedes the authority granted
at the Extraordinary General Meeting held on 25 March 2024.

Eleventh resolution
Voting under the quorum and majority conditions to transact special
business, and having heard and considered the report of the Directors
and the special report of the Statutory Auditors, and in accordance
with the provisions of Article L. 225-129-6, indent 1 of the French
Commercial Code, the shareholders hereby delegate their authority to
the Board of Directors in order to increase the share capital, in one or
several steps at its sole discretion, by issuing shares to be subscribed
in cash, reserved for employees participating in a company’s
employee share ownership plan in accordance with the provisions of
Articles L. 3332-18 et seq. of the French Labour Code.
The shareholders set the maximum increase in the share capital at
EUR 10 million.
The shareholders decide that this delegation entails express waiver by
the shareholders of their pre-emptive subscription right in favour of
the Company’s employees mentioned above as part of the
delegation.
The shareholders decide that the issue price of the new shares will be
determined by the Board of Directors in accordance with the
provisions of Article L. 3332-20 of the Labor Code.
This delegation of authority shall extend for two years from the date
of this General Meeting.
The shareholders grant full powers to the Board of Directors to
implement this delegation of authority and, in particular, to fix the
terms and conditions of the transactions, to set the date and terms of
the issues to be made, to set the number of new shares to be issued
and their vesting date, set the opening and closing dates of the
subscriptions, the procedures for the release of the shares, in
accordance with the legal and regulatory provisions.
The Board of Directors will also have full powers to carry out and
record the completion of capital increases, carry out directly or by
proxy, all subsequent formalities and amend the Articles of
Association accordingly and, in general, take all necessary measures
and enter into any agreements that are useful for the realisation of the
capital increases, under the conditions provided for by the legal and
regulatory provisions.

Twelfth resolution
Voting under the quorum and majority conditions to transact ordinary
and special business, the shareholders hereby confer full powers on
the bearer of an original, copy or abstract of the minutes of this
meeting for the purpose of completing any formalities required by
law.

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Additional Information

Information on HSBC Continental
Europe and its share capital
Information on the company
Name
HSBC Continental Europ e. New name of HSBC France since
1 December 2020.
Commercial name
HSBC.
Date of incorporation
1894.
Registered office
38 avenue Kléber – 75116 Paris – France.
Legal Form
Société Anonyme incorporated under the laws of France, governed
notably by the French Commercial Code. The Company is a credit
institution and authorised bank, and as such is also governed by the
French Monetary and Financial Code.
Term
The Company’s term ends on 30 June 2043, unless previously wound
up or extended.
Corporate purpose (article 3 of the
Articles of Association of HSBC
Continental Europe)
The Company’s corporate purpose is the transaction in all countries of
any and all banking, finance, lending, guarantee, trading, brokerage or
fee-earning business together with the provision of any and all
investment services and related services within the meaning of
articles L. 321-1 and L. 321-2 of the French Monetary and Financial
Code, and more generally, conducting within the limits permitted by
law any and all commercial, industrial or agricultural, securities or real
estate, financial or other operations as well as to provide any and all
services directly or indirectly connected with or which may facilitate
the achievement of the foregoing object.
Trade and companies Register, APE
code and LEI
775 670 284 RCS Paris – APE 6419Z.
LEI: F0HUI1NY1AZMJMD8LP67.
Legal and regulatory framework
Subject to the laws and regulations relating to credit institutions,
including articles in the French Monetary and Financial Code
applicable to them, the Company is governed by commercial law,
including articles L. 210-1 and following of the French Commercial
Code and its Articles of Association.
HSBC Continental Europe is a credit institution licensed as a bank. As
such, the Company may conduct all banking operations. It is,
moreover, authorised to perform any services or related investment
mentioned in articles L. 321-1 and L. 321-2 of the French Monetary
and Financial Code, with the exception of operating a multilateral
trading facility. In its capacity as provider of investment services, it is
subject to the regulations applicable to them under the supervision of
the Autorité des marchés financiers.
It is particularly subject to compliance with a number of prudential
rules and controls by the Autorité de contrôle prudentiel et de
résolution and the European Central Bank. Its Senior Management
and all the people it employs are bound by professional secrecy,
violation of which is punishable by law. It is also an insurance broker.
Documents and information on
display
Any person requiring additional information on the HSBC Continental
Europe group may, without commitment from the Company, request
documents by mail from:
HSBC Continental Europe – 38 avenue Kléber, 75116 Paris, France.
The Articles of Association of the Company can be found in the
‘About HSBC’ section of the HSBC Continental Europe website
www.hsbc.fr.
The information made available on hsbc.fr website are not part of the
Universal Registration Document, unless the information is included
by reference in the current Registration Document.
Financial year
From 1 January to 31 December.
Distribution of profits according to the
Articles of Association
Of the net profit for the year, less any prior year losses (if any), a
minimum of 5 per cent is transferred to feed the legal reserve. This
transfer ceases to be mandatory when the legal reserve has reached
an amount equal to one tenth of the Company’s share cap ital. The
mandatory transfer recommences at any time should the amount of
the legal reserve fall below that tenth.
The balance, plus any retained earnings, less any sums which the
shareholders deem expedient to transfer to new or existing reserves
or to retained earnings, comprises the profit available for distribution
among the shareholders.
However, except in the event of a reduction of the Company’s share
capital, no distribution may be made if total shareholders’ funds are,
or would as a result, become lower than the amount of the
Company’s share capital, plus any reserves, that the law or Articles of
Association do not allow to distribute.
By way of derogation to the provisions of this rule, sums may be
transferred to a special employee profit-sharing reserve, as provided
for by law.
Form of shares
The fully paid up shares have to be registered. They result in
registration on an individual account pursuant to the conditions and
according to the methods stipulated by the legal and regulatory
provisions in force.
Voting rights
Each fully paid up share entitles the holder to one vote.
Transfer of shares
The transfer of shares takes place by way of a transfer from one
account to another.

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There are no restrictions on disposals of shares or negotiable
securities giving access to the share capital in cases of inheritance or
liquidation of matrimonial property, or on disposals to a spouse,
descendant or ascendant.
Any other disposals or transfers of shares or negotiable securities
giving access to the capital, including between shareholders, whether
free of charge or for valuable consideration, whether the said
disposals or transfers take place by way of donation, exchange,
disposal, capital contribution, merger, demerger, partial asset transfer,
distribution following the liquidation of a shareholding company,
universal asset transfer from a company, realisation of a security, or
by way of compulsory or voluntary public tender, and whether they
relate only to legal or beneficial ownership, shall be subject to the
approval of the Board of Directors according to the conditions
described below.
The transferor’s request for approval, which must be served on the
company, shall state the name, forenames, profession and address of
the transferee, or the company name and registered office in the case
of a company, the number of shares or negotiable securities giving
access to the capital of which the disposal or transfer is envisaged,
the price offered or an estimate of the value of the shares or
negotiable securities giving access to the capital. This request for
approval must be countersigned by the transferee.
Approval will be given in the form of a notice, or will be deemed to
have been given, in the absence of a reply within three months of the
date of the request for approval.
The approval decision will be made by the Board of Directors, by a
majority of the Directors present or represented. The transferor shall
be entitled to vote, if he is a Director. The decision will not be
justified, and in the event of a refusal, shall never give rise to any
claim.
If the proposed transferee is approved, the transfer will be completed
in favour of the transferee upon presentation of the supporting
documents, which must be supplied within one month of service of
the decision of the Board of Directors, failing which a fresh approval
will be required.
If the company does not approve the proposed transferee, the
transferor will have a period of eight days from the date of service of
the refusal to notify the Board whether or not he abandons his
proposal.
If the transferor does not expressly abandon his proposal under the
conditions set out above, the Board of Directors shall be obliged
within a period of three months from the date of service of the
refusal, to arrange for the purchase of the shares or negotiable
securities giving access to the capital, by a shareholder, a third party,
or, with the transferor’s consent, by the company, with a view to a
reduction of the capital.
In the event that the offered shares or negotiable securities giving
access to the capital are purchased by shareholders or third parties,
the Board of Directors shall inform the transferor of the names,
forenames, profession and address of the purchasers, or of the
company name and registered office in the case of a company. The
sale price shall be fixed by agreement between the purchasers and
the transferor.
In the event that the offered shares or negotiable securities giving
access to the capital are purchased by the company, the Board of
Directors must first ask for the transferor’s consent. The transferor
must give his answer within eight days of receiving this request.
In the absence of agreement between the parties, the price of the
shares and negotiable securities giving access to the capital shall be
determined by an expert valuation, under the conditions provided by
article 1843-4 of the French Civil Code.
If, upon the expiry of a period of three months, the purchase has not
been completed, approval shall be deemed to have been given.
However, this period may be extended by the courts on an application
by the company.
The transferor may, at any time, and at the latest within a period of
eight days of determination of the price by the expert, abandon the
disposal of his shares or negotiable securities giving access to the
capital.
Disposals to the purchaser or purchasers nominated by the Board of
Directors shall be completed by means of a transfer order signed by
the Chairman of the Board of Directors, who shall serve it to the
transferor within eight days of its date, with an invitation to attend the
registered office to receive the sale price, which shall not bear
interest.
All notices, requests, answers, opinions, waivers, information and
consents provided for by this article shall be validly given if sent by
extrajudicial instrument or by registered letter with proof of receipt
requested.
When an expert is used to determine the price of the shares or
negotiable securities giving access to the share capital under the
conditions provided by article 1843-4 of the French Civil Code, the
expert’s fees shall be paid in equal shares by the assignor and
assignee.
This approval clause, which is the purpose of this article, also applies
to disposals of allocation rights in the event of capital increases by
way of incorporation of reserves, profits or issue premiums, and
disposals of subscription rights in respect of capital increases in cash
or individual waivers of subscription rights in favour of named
individuals.
In these cases, the rules governing approval and the buyback
conditions shall apply to the securities subscribed, and the time given
to the Board of Directors to notify the third party subscriber whether it
accepts him as a shareholder shall be three months from the date of
final completion of the capital increase.
In the event of a buyback, the price shall be equal to the value of the
new shares or negotiable securities giving access to the capital
determined under the conditions provided by article 1843-4 of the
French Civil Code.
Custodian and financial service
Uptevia.

History of the company
1894: The Banque Suisse et Française (‘BSF’) is founded. It will
become the Crédit Commercial de France (‘CCF’).
1987: CCF privatisation. Apart from its national network, CCF has
progressively created a group of regional banks operating under their
own brand.
1994: Centenary of CCF.
2000: CCF joins the HSBC Group and becomes the European platform
of the HSBC Group.
2002: Crédit Commercial de France changes its legal name to CCF.
2005: CCF becomes HSBC France and certain of its subsidiaries
change their legal name and adopt the HSBC brand. HSBC France,
HSBC Hervet, HSBC de Baecque Beau, HSBC UBP and HSBC
Picardie constitute the new HSBC network.
2008: Disposal by HSBC France of its regional banking subsidiaries
(Société Marseillaise de Crédit, Banque de Savoie, Banque Chaix,
Banque Marze, Banque Dupuy, de Parseval, Banque Pelletier and
Crédit Commercial du Sud-Ouest).
2008: Merger of HSBC Hervet, HSBC de Baecque Beau, HSBC UBP
and HSBC Picardie with HSBC France.
2011: Merger of HSBC Private Bank France with HSBC France.
2013: HSBC France acquires HSBC Assurances Vie (France).
2017-2018: Creation of branches in Greece, the United Kingdom,
Belgium, Luxembourg, Ireland, Italy, Poland, the Czech Republic, the
Netherlands and Spain.

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January 2018: Acquisition of certain assets and liabilities from the
HSBC Bank plc branch in Greece and launch of the activities of the
HSBC France branch in Greece.
August 2018: Acquisition of HSBC Bank Polska S.A. and HSBC
Institutional Trust Services (Ireland) DAC.
February 2019: Acquisition of certain assets and liabilities from the
HSBC Bank plc branches in Belgium, Ireland, Italy, the Czech
Republic, the Netherlands and Spain and launch of the activities of the
HSBC France branches in those countries.
March 2019: Acquisition of certain assets and liabilities from the
HSBC Bank plc branch in Luxembourg and launch of the activities of
the HSBC France branch in this country.
April 2019: Merger of HSBC Bank Polska S.A. and HSBC Institutional
Trust Services (Ireland) DAC with HSBC France.
May 2019: Creation of a branch in Sweden and launch of the activities
in this branch in October 2019.
December 2020: HSBC France becomes HSBC Continental Europe
and transfers its registered office 38 avenue Kléber 75116 Paris.
November 2022: Acquisition of 70.03 per cent of the share capital of
HSBC Bank Malta p.l.c. and, by the HSBC Continental Europe branch
in Germany, of 100 per cent of HSBC Trinkaus & Burkhardt GmbH.
July 2023: Sale of the activities of the HSBC Continental Europe
branch in Greece.
November 2023: Acquisition of 100 per cent of the share capital of
HSBC Private Bank (Luxembourg) S.A., the HSBC Group’s Continental
European private banking hub.
January 2024: Sale by HSBC Continental Europe of its Retail Banking
operations in France.
January 2024: Disposal of the subsidiary HSBC SFH (France) as part
of the sale of the Retail Banking activities in France.
November 2024: Disposal of the subsidiary HSBC Epargne Entreprise
(France).
October 2025: Disposal of the subsidiary HSBC Assurances Vie
(France).

Material contracts
HSBC Continental Europe currently has no material contracts, other
than those concluded as part of the normal course of its business,
that gives any member of the Group a right or obligation having a
material impact on the issuer’s ability to fulfil its obligations to holders
of issued securities.

Information on the share capital
At 31 December 2025, the share capital amounted to
EUR 1,327,915,960 divided into 265,583,192 fully paid up shares,
each with a nominal value of EUR 5.

Movements in share capital
| Number of shares | Share capital in euros | Share premium in euros
At 1 Jan 2025 | 265,583,192 | 1,327,915,960 | 6,746,932,015.46
Increase (Reduction) during the year | — | — | —
At 31 Dec 2025 | 265,583,192 | 1,327,915,960 | 6,746,932,015.46
At 1 Jan 2024 | 212,466,555 | 1,062,332,775 | 5,264,446,676.79
Increase (Reduction) during the year | 53,116,637 | 265,583,185 | 1,482,485,338.67
At 31 Dec 2024 | 265,583,192 | 1,327,915,960 | 6,746,932,015.46
At 1 Jan 2023 | 212,466,555 | 1,062,332,775 | 5,264,446,676.79
Increase (Reduction) during the year | — | — | —
At 31 Dec 2023 | 212,466,555 | 1,062,332,775 | 5,264,446,676.79
At 1 Jan 2022 | 98,231,196 | 491,155,980 | 2,137,326,990.33
Increase (Reduction) during the year | 114,235,359 | 571,176,795 | 3,127,119,686.46
At 31 Dec 2022 | 212,466,555 | 1,062,332,775 | 5,264,446,676.79
At 1 Jan 2021 | 98,231,196 | 491,155,980 | 2,137,326,990.33
Increase (Reduction) during the year | — | — | —
At 31 Dec 2021 | 98,231,196 | 491,155,980 | 2,137,326,990.33

Ownership of share capital and voting rights at 31 December 2025
HSBC Bank plc has owned more than 99.99 per cent of the share
capital and voting rights since 31 October 2000. This percentage has
not varied since then. HSBC Bank plc is a wholly-owned subsidiary of
HSBC Holdings plc, a company quoted in London, Hong Kong, New
York and Bermuda. The rest of the share capital and voting rights is
owned by Canada Square Nominees (UK) Limited, an indirect wholly-
owned subsidiary of HSBC Holdings plc, and external shareholders.

Dividend and payout policy

| 2025 | 2024 | 2023 | 2022 | 2021
Number of shares at 31 December | 265,583,192 | 265,583,192 | 212,466,555 | 212,466,555 | 98,231,196
Average number of shares outstanding during the year | 265,583,192 | 214,212,855 | 212,466,555 | 132,279,780 | 98,231,196
EPS 1 | EUR 1.87 | EUR 2.45 | EUR 2.2 | EUR (7.30) | EUR 2.74
Net dividend |  | — | — | — | —
Exceptional dividend |  | — | — | — | —
Dividend + tax credit |  | — | — | — | —
Payout 2 |  | — | — | — | —

1 Calculated on the weighted average number of shares outstanding after deducting own shares held.
2 Dividend paid as a percentage of reported earnings.
At the Annual General Meeting to be held on 27 March 2026, the Board will propose to distribute a dividend in respect of year 2025.
Dividends which are not claimed within five years of the payment date lapse and become the property of the French Treasury.

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303

Additional Information

Persons responsible for the Universal
Registration Document and for auditing
the financial statements
Person responsible for the Universal Registration Document
Mr Christopher Davies, Chief Executive Officer ad interim
Statement by the person responsible for the Universal Registration Document
I certify that the information contained in this Universal Registration Document is, to the best of my knowledge, true and accurate and contains
no omission likely to affect its meaning.
I certify, to the best of my knowledge, that the annual financial accounts have been prepared in accordance with the applicable accounting
standards and give a true and fair view of assets and liabilities, financial position and result of the issuer and all the entities included in the
consolidation, and that the Management Report (the cross-reference table on page 306 indicates the content of said report) presents a fair view
of the business performance, results and financial position of the issuer and of all the entities included in the consolidation scope, and describes
the principal risks and uncertainties to which they are exposed and that it has been prepared in accordance with applicable sustainability
reporting standards.
Paris, 25 February 2026
Christopher Davies, Chief Executive Officer ad interim

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304

Additional Information

Persons responsible for auditing the financial statements

Incumbents | Date first appointed | Date re-appointed | Date term ends
PricewaterhouseCoopers Audit 1 | 2015 | 2024 | 2030
Represented by Amel Hardy-Ben Bdira 2 63, rue de Villiers 92200 Neuilly-sur-Seine |  |  |
BDO Paris 3 | 2007 | 2024 | 2030
Represented by Vincent Génibrel 4 43-47, avenue de la Grande Armée 75116 Paris |  |  |

1 Member of the Compagnie Régionale des Commissaires aux comptes of Versailles.
2 PricewaterhouseCoopers Audit represented by Amel Hardy-Ben Bdira from 2025.
3 Member of the Compagnie Régionale des Commissaires aux comptes of Paris.
4 BDO Paris represented by Vincent Génibrel starting from 2023.
Statutory Auditors’ fees paid in 2025 within the HSBC Continental Europe group are available in Note 7 to the consolidated financial statements
on page 224.

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Additional Information

Cross-reference table
The following cross-reference table refers to the main headings required by the European regulation 2017/1129 (Annex I and Annex II)
implementing the directive known as ‘Prospectus’ and to the pages of the Universal Registration Document 2024 D.25-0044.

Sections of Annex I of the EU Regulation 2017/1129 | Pages in this 2025 Universal Registration Document
1.1 & 1.2 | Persons responsible | page 303
1.3 | Experts' reports | N/A
1.4 | Third party information | N/A
1.5 | Competent authority approval | N/A
2 | Statutory auditors | page 304
3 | Risk factors | pages 128 to 138
4 | Information about the issuer | page 300
5 | Business overview |
5.1 | Principal activities | pages 4 to 16 and 265
5.2 | Principal markets | pages 4 to 16 and 265
5.3 | Important events | pages 210 to 211, 265 to 266
5.4 | Strategy and objectives | pages 4 to 9
5.5 | Potential dependence | N/A
5.6 | Founding elements of any statement by the issuer concerning its position | pages 4 and 16
5.7 | Investments | pages 256 to 257, 294 to 297, 307 to 308
6 | Organisational structure |
6.1 | Brief description of the group | pages 3 to 17, 286 to 287 and 294 to 297
6.2 | Issuer's relationship with other group entities | pages 294 to 296
7 | Operating and financial review |
7.1 | Financial condition | pages 191, 193, 263 to 264
7.2 | Operating results | pages 10 to 16, 191, and 263
8 | Capital resources |
8.1 | Issuer's capital resources | pages 194 and 279
8.2 | Sources and amounts of the issuer's cash flows | page 196
8.3 | Borrowing requirements and funding structure | pages 123, 165 to 167, 168 to 216
8.4 | Information regarding any restrictions on the use of capital resources that have materially affected, or could materially affect the issuer's operations | N/A
8.5 | Sources of funds needed | N/A
9 | Regulatory environment | pages 9, 176
10 | Trend information | pages 4 to 8
11 | Profit forecasts or estimates | N/A
12 | Administrative, management and supervisory bodies and senior management |
12.1 | Administrative and management bodies | pages 19 to 24
12.2 | Administrative and management bodies conflicts of interests | page 33
13 | Remuneration and benefits |
13.1 | Amount of remuneration paid and benefits in kind granted | pages 34 to 43, 220 to 224
13.2 | Total amounts set aside or accrued by the issuer or its subsidiaries to provide for pension, retirement or similar benefits | pages 34 to 43, 220 to 224, 280
14 | Board practices |
14.1 | Date of expiration of the current term of office | pages 19 to 24
14.2 | Information about members of the administrative, management or supervisory bodies' service contracts | N/A
14.3 | Information about the issuer's audit committee and remuneration committee | pages 28 to 29, 31 to 32
14.4 | Corporate governance regime | page 18
14.5 | Potential material impacts on the corporate governance | N/A
15 | Employees |
15.1 | Number of employees | page 220
15.2 | Shareholdings and stock options | pages 37 to 38
15.3 | Arrangements involving the employees in the capital of the issuer | N/A
16 | Major shareholders |
16.1 | Shareholders holding more than 5 per cent of the share capital or voting rights | pages 300 to 302
16.2 | Different voting rights | page 300
16.3 | Control of the issuer | pages 19 to 20, 304
16.4 | Arrangements, known to the issuer, which may at a subsequent date result in a change in control of the issuer | N/A
17 | Related party transactions | pages 43 to 45, 254 to 256, 256 to 257, 286 to 287

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Additional Information

Sections of Annex I of the EU Regulation 2017/1129 | Pages in this 2025 Universal Registration Document
18 | Financial information concerning the issuer's assets and liabilities, financial position and profits and losses |
18.1 | Historical financial information | pages 15, 190 to 257, 262 to 287, 306
18.2 | Interim and other financial information | N/A
18.3 | Auditing of historical annual financial information | pages 258 to 261, 288 to 291
18.4 | Pro forma financial information | N/A
18.5 | Dividend policy | pages 227 and 302
18.6 | Legal and arbitration proceedings | pages 175 to 176, 253, 285 to 286
18.7 | Significant change in the issuer's financial position | pages 15, 256 and 286
19 | Additional information |
19.1 | Share capital | pages 251, 279 and 302
19.2 | Memorandum and Articles of Association | pages 300 and 302
20 | Material contracts | page 302
21 | Documents available | page 300

Sections of Annex II of the EU Regulation 2017/1129 | Pages in this 2025 Universal Registration Document
1 | Information to be disclosed about the issuer | page 1

According to article 28 of the European Regulation 809/2004, are included by reference in this Registration Document:
– the consolidated financial statements for the year ended 31 December 2023 and the Statutory Auditors’ report on those consolidated financial
statements, presented on pages 189 to 274 and 275 to 280 of reference document D.24-0076 filed with the AMF on 1 March 2024; the
information can be found here: https://www.hsbc.com/-/files/hsbc/investors/hsbc-results/2023/annual/pdfs/hsbc-continental-europe/240301-
registration-document-and-annual-financial-report-2023-english-zip.zip.
– the consolidated financial statements for the year ended 31 December 2024 and the Statutory Auditors’ report on those consolidated financial
statements, presented on pages 241 to 322 and 323 to 327 of reference document D.25-0044 filed with the AMF on
19 February 2025; the information can be found here: https://www.hsbc.com/-/files/hsbc/investors/hsbc-results/2024/annual/pdfs/hsbc-
continental-europe/250219-registration-document-and-annual-financial-report-2024-english-zip.zip.
These documents are available on the website www.hsbc.fr and on that of the Autorité des marchés financiers www.amf-france.org.
Anyone wishing to obtain additional information on the HSBC Continental Europe group can, without obligation, request the documents by mail:
HSBC Continental Europe
38 Avenue Kléber
75116 Paris
France

This Registration Document includes the annual financial report: | 2025
Parent company financial statements | pages 262 to 287
Consolidated financial statements | pages 190 to 257
Management report Refer to the Management report cross ref table Statement by person responsible | pages 304 and 306
Statutory Auditors’ report | pages 258 to 261 and 288 to 291
Cross table on Management report: |
Analyses of the activity, results and financial situation | pages 4 to 17 and 264
Risk factors | pages 123 to 166 and 168 to 189
Capital and Leverage Management | pages 167 to 167
Authorities to increase the share capital | page 302
Sustainability statement | pages 46 to 102
Essential intangible resources | page 6
Corporate governance report | pages 18 to 50
Remuneration policy compensation and other advantages to the executive Director | pages 34 to 50
Mandates and functions of the Executive Directors | pages 19 to 23
Activities of the subsidiaries and Investment policy | pages 256 to 257 and 294 to 297
Five year highlights | pages 15 and 292
Information on supplier payable amounts schedule | page 17
Other legal documents relating to the Annual General Meeting to be held on 27 March 2026 | page 298
Information on HSBC Continental Europe and its share capital | pages 300 to 302

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307

Additional Information

Network of offices
HSBC Continental Europe network in
France
HSBC Continental Europe
26 locations
38 avenue Kléber
75116 Paris
Telephone: +33 1 40 70 70 40
www.hsbc.fr
HSBC Continental Europe subsidiaries
Distribution
HSBC Factoring (France)
38 avenue Kléber
75116 Paris
Telephone: +33 1 40 70 72 00
Asset Management
HSBC Global Asset Management (France)
Immeuble Cœur Défense
110 esplanade du Général de Gaulle
92400 Courbevoie
Telephone: +33 1 40 70 70 40
HSBC REIM (France)
Immeuble Cœur Défense
110 esplanade du Général de Gaulle
92400 Courbevoie
Telephone: +33 1 40 70 39 44
Private Banking
HSBC Private Bank (Luxembourg) S.A.
France Branch
38 avenue Kléber
75116 Paris
Telephone: +33 1 40 70 70 40
Other locations of the HSBC Group in
France
HSBC Bank plc Paris Branch
38 avenue Kléber
75116 Paris
Telephone: +33 1 40 70 70 40

Locations of the HSBC Continental
Europe group abroad
Belgium
HSBC Continental Europe
branch
Square de Meeûs 23
1000 Brussels
Telephone: +32 2 761 2670
Czech Republic
HSBC Continental Europe
branch
Na Florenci 2116/15, Nové Město
110 00 Prague 1
Telephone: +42 (0)22 5024 555
Germany
HSBC Continental Europe
branch
Hansaallee 3
Düsseldorf, 40549
Telephone: +49 211 910-0
Ireland
HSBC Continental Europe
branch
1 Grand Canal Square, Grand Canal Harbour
Dublin 2, D02 P820
Telephone: +353 (0) 1 635 6000

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Additional Information

Italy
HSBC Continental Europe
branch
Via San Protaso 3
20121 Milan
Telephone: +39 02 72 437 600
HSBC Global Asset Management (France)
branch
Via San Protaso 3
20121 Milan
Telephone: +39 02 72 437 496
Luxembourg
HSBC Continental Europe
branch
18, boulevard de Kockelscheuer
L-1821 Luxembourg
Telephone: +352 27 12 33 1
HSBC Private Bank (Luxembourg) S.A.
18, boulevard de Kockelscheuer
L -1821 Luxembourg
Telephone: +352 47 93 31 1
Malta
HSBC Bank Malta p.l.c.
116 Archbishop Street
Valletta VLT 1444
Telephone: +356 2380 2380
Netherlands
HSBC Continental Europe
branch
De Entree 247,
1101 HG Amsterdam ZO
Telephone: +31 (0) 20 567 1230
Poland
HSBC Continental Europe
branch
Rondo ONZ 1
00-124 Varsovie
Telephone: +48 22 354 05 00
Spain
HSBC Continental Europe
branch
Plaza Pablo Ruiz Picasso, 1
Torre Picasso planta, 32
28020 Madrid
Telephone: +34 914 566 100
HSBC Global Asset Management (France)
branch
Plazza Pablo Ruiz Picasso, 1
Torre Picasso Planta, 32
28020 Madrid
Telephone: +34 914 566 979
Sweden
HSBC Continental Europe
branch
Birger Jarlsgatan 4
SE-114 34 Stockholm
Telephone: +46 8 4545435

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HSBC Continental Europe
38 Avenue Kléber
75116 Paris
France
Telephone: (33 1) 40 70 70 40
www.hsbc.fr