HSBC Holdings plc Announces New SGD 6NC5 HoldCo Senior Notes at an IPG of 3.10%

• HSBC Holdings plc (“HSBC”) intends to issue new SGD Senior Unsecured 6NC5 notes with an initial price guidance (“IPG”) of 3.10%. The bond is expected to be issued on 17 August 2026, with a first call date on 17 August 2031 and maturity date of 17 August 2032. If uncalled, the bond will reset to the prevailing 1-year SORA-OIS plus the initial spread. Expected issue ratings are A- / A+ / A3 (S&P / Fitch / Moody’s), in line with HSBC’s own issuer-level ratings. Net proceeds are earmarked for general corporate purposes.

• HSBC is one of the world’s largest banking and financial services groups, with operations across four core business segments - Hong Kong, UK, Corporate and Institutional Banking (“CIB”), and International Wealth and Premier Banking (“IWPB”) - alongside Corporate Centre. Corporate Centre mainly comprises central and group-level activities, including costs not allocated to the four operating businesses and intra-Group elimination items.

• For the three months ended 30 June 2026 (2Q26), HSBC reported profit before tax of US$10.1 billion, up 60% YoY (2Q25: US$6.3 billion), and profit after tax of US$7.9 billion, up 63% YoY (2Q25: US$4.9 billion). Revenue rose 16% YoY to US$19.1 billion, aided by a US$1.3 billion net favourable impact in notable items. This primarily reflected the non-recurrence of US$2.1 billion of BoCom-related dilution and impairment losses recognised in 2Q25.

• Operating expenses of US$8.7 billion were 2% lower YoY (2Q25: US$8.9 billion), due to lower restructuring costs and the phasing of performance-related pay accruals, partly offset by continued technology investment.

• Expected credit losses ("ECL") of US$1.1 billion in 2Q26 were broadly stable YoY (2Q25: US$1.1 billion) but down from US$1.3 billion in 1Q26. The 2Q26 charge was primarily stage 3-related, including US$0.2 billion tied to the Hong Kong commercial real estate (“CRE”) sector, down from US$0.4 billion in 2Q25, indicating some moderation in credit costs. While HSBC noted that Hong Kong real estate conditions continued to stabilise in 1H26, supported by activity in the residential, selected retail and prime office segments, the recovery remains uneven. Valuation pressure persists, particularly in non-prime segments, while market liquidity remains tight and demand could soften amid heightened uncertainty.

• For the first half of 2026 (1H2026), fee and other income from the Wealth business rose 18% YoY on a constant currency basis to US$5.5 billion, while Wholesale Transaction Banking grew 4% YoY on a constant currency basis. Banking net interest income increased to US$22.9 billion, with the net interest margin widening from 1.57% to 1.61%. Profit before tax excluding notable items was US$20.4 billion, up 6% YoY. The bank’s annualised return on tangible equity (RoTE) excluding notable items reached 19.1% (1H25: 18.2%). This is also comfortably above HSBC’s own target of 17% or better for 2026- 2028 (set out in February 2026), reflecting solid core performance.

• HSBC’s CET1 ratio stood at 14.1% as of end-June 2026, down from 14.9% at end-2025, mainly reflecting the impact of the Hang Seng Bank privatisation, dividend distributions, and an increase in risk-weighted assets (“RWAs”). Nonetheless, the Group’s CET1 ratio remains within its self-set target range of 14.0%-14.5%. HSBC also remained compliant with the PRA’s regulatory capital adequacy requirements throughout 1H26; its Pillar 2A requirement stood at 2.5% of RWAs, of which 1.4% was required to be met with CET1 capital. Going forward, the management has reiterated its intention to maintain CET1 ratio within range and resume share buy-backs of up to US$1 billion.

• HSBC held US$713.7 billion of average high-quality liquid assets ("HQLA") as of 30 June 2026 (31 Dec 2025: US$702.1 billion). The average liquidity coverage ratio ("LCR"), based on the preceding 12 months) was 134%, modestly lower than 137% at end-2025 but still comfortably above the 100% regulatory minimum, reflecting a stable and healthy liquidity position.

• 2Q26 financial results have once again reinforced HSBC’s position as a fundamentally strong issuer. The Group benefits from its scale, diversified earnings base across Asia, the UK, and its international network, and a capital and liquidity position that remains comfortably above regulatory minima despite the step-down in CET1 over the period.

• Compared with HSBC's own 3.400% 28 May 2033 note, which currently yields 2.86%, the new note's 3.10% IPG offers a 24bps pickup. The existing notes have around 5.8 years to call and 6.8 years to maturity, compared with 5.0 years and 6.0 years, respectively, for the new issue. The new notes offer a higher yield despite having a slightly shorter call and maturity profile.

• Compared with other comparable SGD senior peers, the 3.10% IPG offers a 14bps pickup over Banco Santander’s 2.95% 30 July 2032 notes at a 2.96% yield-to-worst, and a 69bps pickup over Standard Chartered’s 4.50% 14 June 2033 notes at 2.41%.

• HSBC’s expected issue ratings of A-/A+/A3 (S&P/Fitch/Moody’s) are broadly comparable to Santander’s A-/A/Baa1, while being stronger than Standard Chartered’s BBB+/A/A3 on S&P. Given the similar tenor to Santander and HSBC’s stronger Moody’s rating, the yield pickup appears relatively attractive from a credit-quality perspective.

• Overall, we see the 3.10% IPG as attractively priced, particularly given HSBC’s strong credit profile and the yield pickup over both its own existing issue and comparable peers.

Table 1: Peer Comparison