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Overview of the Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 310.12 636.82 Td (Act Stress ) Tj ET Q q 0 0 0 rg BT 357.38 636.82 Td (T) Tj ET Q q 0 0 0 rg BT 363.62 636.82 Td (est) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 375.50 636.77 Td (..........................................................) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 48.00 616.82 Td (2. Description of the Bank Holding Company Severely ) Tj ET Q q 0 0 0 rg BT 295.15 616.82 Td (Adverse Scenario) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 372.75 616.77 Td (...........................................................) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 48.00 596.82 Td (3. Forecasting Methodologies Utilized for Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 412.47 596.82 Td (Act Stress ) Tj ET Q q 0 0 0 rg BT 459.73 596.82 Td (T) Tj ET Q q 0 0 0 rg BT 465.97 596.82 Td (esting) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 493.75 596.77 Td (...............) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 48.00 576.82 Td (4. Mid-Cycle Company-Run Stress ) Tj ET Q q 0 0 0 rg BT 208.52 576.82 Td (T) Tj ET Q q 0 0 0 rg BT 214.47 576.82 Td (est Results HSBC North ) Tj ET Q q 0 0 0 rg BT 332.12 576.82 Td (America Holdings Inc.) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 433.25 576.77 Td (.....................................) Tj ET Q BT /F1 11.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 550.00 636.57 Td (1) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 550.00 616.57 Td (1) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 550.00 596.57 Td (2) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 550.00 576.57 Td (4) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 7 0 obj <> endobj 8 0 obj <> stream 1 0 0 rg /GS0 gs 24.50 779.00 12.00 -44.00 re f /GS0 gs BT /F2 20.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 1 0 0 rg BT 45.00 762.96 Td (HSBC North ) Tj ET Q q 1 0 0 rg BT 159.46 762.96 Td (America Holdings Inc.) 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Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 633.20 Td (This document makes certain references that are not historical facts, including statements about HSBC's beliefs and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 620.00 Td (expectations, which are forward-looking statements. ) Tj ET Q q 0 0 0 rg BT 277.86 620.00 Td (W) Tj ET Q q 0 0 0 rg BT 287.37 620.00 Td (ords such as may, will, should, would, could, ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 606.80 Td (appears, believe, intends, expects, estimates, tar) Tj ET Q q 0 0 0 rg BT 295.24 606.80 Td (geted, plans, anticipates, goal) Tj ET Q q 0 0 0 rg BT 449.58 606.80 Td ( and similar expressions ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 593.60 Td (are intended to identify forward-looking statements but should not be considered as the only means through which ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 580.40 Td (these statements may be made. ) Tj ET Q q 0 0 0 rg BT 183.48 580.40 Td (These matters or statements will relate to our future financial condition, economic ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 567.20 Td (forecast, results of operations, plans, objectives, performance or business developments and will involve known and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 554.00 Td (unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 540.80 Td (materially dif) Tj ET Q q 0 0 0 rg BT 104.36 540.80 Td (ferent from that which was expressed or implied by such forward-looking statements. ) Tj ET Q q 0 0 0 rg BT 483.25 540.80 Td (The projections ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 527.60 Td (disclosed in this document should not be viewed or interpreted as forecasts of expected outcomes or capital adequacy ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 514.40 Td (or of the actual financial condition of either HSBC or HSBC Bank USA, N.A. Rather) Tj ET Q q 0 0 0 rg BT 420.63 514.40 Td (, these projections are based ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 501.20 Td (solely on the hypothetical adverse scenarios and other specific conditions required to be assumed by HSBC for the ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 488.00 Td (purpose of Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 150.40 488.00 Td (Act stress testing as well as modeling assumptions necessary to project and assess the impact ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 474.80 Td (of the various adverse scenarios on HSBC) Tj ET Q q 0 0 0 rg BT 233.79 474.80 Td (s capital position. Forward-looking statements speak only as of the date of ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 461.60 Td (this document. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 448.40 Td (circumstances occurring or existing after the date of any forward-looking statements. Factors that could cause HSBC) Tj ET Q q 0 0 0 rg BT 562.46 448.40 Td (s ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 435.20 Td (actual results to dif) Tj ET Q q 0 0 0 rg BT 128.81 435.20 Td (fer materially from those described in forward-looking statements can be found in the annual report ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 422.00 Td (on Form 10-K for HSBC USA) Tj ET Q q 0 0 0 rg BT 179.15 422.00 Td ( Inc. ) Tj ET Q q 0 0 0 rg BT 200.84 422.00 Td (Additionally) Tj ET Q q 0 0 0 rg BT 255.73 422.00 Td (, please refer to the HSBC USA) Tj ET Q q 0 0 0 rg BT 395.35 422.00 Td ( Inc. annual report on Form 10-K for a ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 408.80 Td (broader description of our capital planning and risk management processes.) 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Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 63.00 266.20 Td ( ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 81.00 266.20 Td (The global market shock component of the severely adverse scenario assumes lar) Tj ET Q q 0 0 0 rg BT 438.48 266.20 Td (ge instantaneous movements ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 81.00 253.00 Td (across market factors including equities, interest rates, foreign exchange rates, credits spreads and commodity ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 81.00 239.80 Td (prices.) 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Dif) Tj ET Q q 0 0 0 rg BT 387.24 134.20 Td (ferences also arise due to the evolving ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 121.00 Td (risk quantification methodologies and regulatory capital frameworks that may be applicable to each stress test.) Tj ET Q endstream endobj 11 0 obj <> endobj 12 0 obj <> stream 1 0 0 rg /GS0 gs 24.50 779.00 12.00 -44.00 re f /GS0 gs BT /F2 20.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 1 0 0 rg BT 45.00 762.96 Td (HSBC North ) Tj ET Q q 1 0 0 rg BT 159.46 762.96 Td (America Holdings Inc.) Tj ET Q BT /F1 16.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 45.00 740.96 Td (2019 Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 333.87 740.96 Td (Act Stress ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 402.91 740.96 Td (T) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 411.56 740.96 Td (est Results) Tj ET Q BT /F1 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 9.00 Tf ET q 0 0 0 rg BT 571.50 47.80 Td (2) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 45.00 712.60 Td (3. For) Tj ET Q q 0 0 0 rg BT 75.65 712.60 Td (ecasting Methodologies Utilized for) Tj ET Q q 0 0 0 rg BT 240.73 712.60 Td ( Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 428.97 712.60 Td (Act Str) Tj ET Q q 0 0 0 rg BT 462.67 712.60 Td (ess ) Tj ET Q q 0 0 0 rg BT 478.67 712.60 Td (T) Tj ET Q q 0 0 0 rg BT 484.99 712.60 Td (esting) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 512.49 712.60 Td ( ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 687.40 Td (Our stress testing methodologies focus on empirically defining the relationship between macroeconomic variables, ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 674.20 Td (business volumes, revenues and losses in order to estimate outcomes that may result from a specific stress scenario. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 661.00 Td (W) Tj ET Q q 0 0 0 rg BT 54.50 661.00 Td (e use a series of models and estimation methodologies, coupled with management judgment and overlays to model ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 647.80 Td (results to take account of HSBC North ) Tj ET Q q 0 0 0 rg BT 217.00 647.80 Td (America) Tj ET Q q 0 0 0 rg BT 257.93 647.80 Td (s specific risk profile, to produce a comprehensive estimate of future ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 634.60 Td (business performance. ) Tj ET Q q 0 0 0 rg BT 145.50 634.60 Td (Additional macroeconomic variables are projected to facilitate the forecasting of certain risk- ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 621.40 Td (and portfolio-specific factors. Stress testing methodologies are subject to uncertainties and modeling limitations, ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 608.20 Td (including uncertainty about the extent to which historical relationships between macroeconomic factors and business ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 595.00 Td (outcomes will continue to be relevant in a severely stressed economic environment. ) Tj ET Q q 0 0 0 rg BT 415.33 595.00 Td (W) Tj ET Q q 0 0 0 rg BT 424.83 595.00 Td (e regularly consider these ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 581.80 Td (uncertainties and the limitations of our estimates when evaluating stress test results. ) Tj ET Q q 0 0 0 rg BT 415.97 581.80 Td (The methodologies apply ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 568.60 Td (accounting practices consistent with HSBC) Tj ET Q q 0 0 0 rg BT 238.69 568.60 Td (s significant accounting policies, generally accepted accounting principles ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 555.40 Td (\("GAAP"\) in the U.S., and the regulatory capital rules in place at the time of the stress test.) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 529.00 Td (The forecast methodologies employed by HSBC to quantify the impact of the hypothetical assumptions over the stress ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 515.80 Td (testing forecast period include, but are not limited to, the following areas presented below) Tj ET Q q 0 0 0 rg BT 439.25 515.80 Td (. ) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 45.00 489.40 Td (Balance Sheet) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 463.00 Td (The balance sheet under each scenario reflects projected changes over the planning horizon based on the ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 449.80 Td (macroeconomic environment of each scenario, business growth and planned activity) Tj ET Q q 0 0 0 rg BT 415.72 449.80 Td (, changes in carrying values ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 436.60 Td (resulting from mark-to-market movements and other balance sheet impacts, including draws on unfunded ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 423.40 Td (commitments.) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 45.00 397.00 Td (Pr) Tj ET Q q 0 0 0 rg BT 56.40 397.00 Td (e-Pr) Tj ET Q q 0 0 0 rg BT 76.35 397.00 Td (ovision Net Revenue) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 370.60 Td (HSBC) Tj ET Q q 0 0 0 rg BT 76.79 370.60 Td (s net interest income, non-interest income, and non-interest expense forecasts under the firm's severely adverse ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 357.40 Td (scenario reflect a detailed process in which business segment projections are developed over the nine-quarter capital ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 344.20 Td (planning horizon. ) Tj ET Q q 0 0 0 rg BT 125.15 344.20 Td (The revenue forecast is aligned with the balance sheet projections for each business segment over ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 331.00 Td (the capital planning horizon, as well as HSBC) Tj ET Q q 0 0 0 rg BT 250.91 331.00 Td (s expectations of customer behavior and competitive dynamics.) Tj ET Q BT /F1 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 1 0 0 rg BT 45.00 317.80 Td ( ) Tj ET Q BT /F2 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 45.00 304.60 Td (Losses) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 278.20 Td (Stress losses from wholesale and retail credit, market risk and operational risk are calculated using the following ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 265.00 Td (methodologies:) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 251.80 Td ( ) Tj ET Q BT /F3 11.00 Tf ET q 0 0 0 rg BT 45.00 238.60 Td (Cr) Tj ET Q q 0 0 0 rg BT 56.21 238.60 Td (edit risk) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 91.95 238.60 Td (: Loans to our customers are a significant component of HSBC) Tj ET Q q 0 0 0 rg BT 371.79 238.60 Td (s total assets, and their related credit risk is ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 225.40 Td (among the most significant risks we manage. ) Tj ET Q q 0 0 0 rg BT 245.81 225.40 Td (When estimating loan losses, probability of default, exposure at default, ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 212.20 Td (and loss severity assumptions are incorporated into the loan-loss estimates. Loss estimates take into consideration the ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 199.00 Td (unique characteristics of our wholesale and retail loan portfolios. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 172.60 Td (A) Tj ET Q q 0 0 0 rg BT 52.34 172.60 Td ( variety of models are used to project losses on loans. ) Tj ET Q q 0 0 0 rg BT 289.80 172.60 Td (These models take into consideration many factors, including ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 159.40 Td (historical performance, the projected economic scenarios, current credit characteristics and credit-quality ratings. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 146.20 Td (Where appropriate, we incorporate country-specific, state and local economic variables to reflect geographical ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 133.00 Td (concentrations within a given loan portfolio. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 106.60 Td (Wholesale loss estimates are segmented based on asset types, specifically commercial and industrial, and commercial ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 93.40 Td (real-estate portfolios. ) Tj ET Q q 0 0 0 rg BT 141.01 93.40 Td (W) Tj ET Q q 0 0 0 rg BT 150.96 93.40 Td (ithin each of these, the portfolio is segmented further to capture key portfolio risk ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 80.20 Td (characteristics, such as particular industry concentrations, that may react dif) Tj ET Q q 0 0 0 rg BT 378.64 80.20 Td (ferently under various stress scenarios. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 67.00 Td (Rigorous statistical techniques are used to determine and estimate relationships between probability of default and ) Tj ET Q endstream endobj 13 0 obj <> endobj 14 0 obj <> stream 1 0 0 rg /GS0 gs 24.50 779.00 12.00 -44.00 re f /GS0 gs BT /F2 20.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 1 0 0 rg BT 45.00 762.96 Td (HSBC North ) Tj ET Q q 1 0 0 rg BT 159.46 762.96 Td (America Holdings Inc.) Tj ET Q BT /F1 16.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 45.00 740.96 Td (2019 Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 333.87 740.96 Td (Act Stress ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 402.91 740.96 Td (T) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 411.56 740.96 Td (est Results) Tj ET Q BT /F1 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 9.00 Tf ET q 0 0 0 rg BT 571.50 47.80 Td (3) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 712.40 Td (macroeconomic factors. Probability of default projections are sensitive to and consistent with scenario conditions, ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 699.20 Td (resulting in loss rates that are indicative of underlying economic fundamentals. Loss severity is projected using ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 686.00 Td (similar techniques.) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 659.60 Td (Losses on retail loans are projected using statistical models that use economic attributes \(such as unemployment rate ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 646.40 Td (and housing-price levels\) and portfolio or loan-level credit characteristics within an expected loss framework. ) Tj ET Q BT /F3 11.00 Tf ET q 0 0 0 rg BT 45.00 620.00 Td (Market risk and counterparty cr) Tj ET Q q 0 0 0 rg BT 186.34 620.00 Td (edit risk:) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 225.75 620.00 Td ( Market risk includes all trading mark-to-market positions and securities ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 606.80 Td (carried at fair value. ) Tj ET Q q 0 0 0 rg BT 136.10 606.80 Td (The potential impact of market movements on trading positions and mark-to-market losses for ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 593.60 Td (fair) Tj ET Q q 0 0 0 rg BT 60.04 593.60 Td (-value assets not held in the trading book \(including loans held for sale or held for investment under the fair) Tj ET Q q 0 0 0 rg BT 533.61 593.60 Td (-value ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 580.40 Td (option\) are incorporated as appropriate. Counterparty credit risk is the risk that a counterparty to a transaction could ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 567.20 Td (default or deteriorate in creditworthiness before the final settlement of a transaction) Tj ET Q q 0 0 0 rg BT 415.49 567.20 Td (s cash flows. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 554.00 Td () Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 540.80 Td (For the 2019 mid-cycle company-run submission, HSBC North ) Tj ET Q q 0 0 0 rg BT 326.40 540.80 Td (America included an instantaneous market shock and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 527.60 Td (counterparty default component in the severely adverse scenario. ) Tj ET Q q 0 0 0 rg BT 333.43 527.60 Td (These losses were taken in the first quarter of the ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 514.40 Td (planning horizon and were treated as an add-on component to the nine-quarter loss projection.) Tj ET Q BT /F3 11.00 Tf ET q 0 0 0 rg BT 45.00 488.00 Td (Operational risk:) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 121.69 488.00 Td ( Operational risk is the risk of loss as a result of inadequate or failed internal processes, people and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 474.80 Td (systems or from external events, including legal risk.Operational risk arises from day-to-day operations or external ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 461.60 Td (events, and is relevant to every aspect of the business. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 435.20 Td (HSBC North ) Tj ET Q q 0 0 0 rg BT 104.29 435.20 Td (America stresses operational risk by analyzing the firm's internal loss history and using regression and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 422.00 Td (simulation models to forecast losses, assessing our known material legal matters, and using expert judgment and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 408.80 Td (internal and external reference data to perform scenario analysis on the firm's most material risks.) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 45.00 382.40 Td (Capital Position) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 356.00 Td (The projected capital levels and capital ratios for HSBC North ) Tj ET Q q 0 0 0 rg BT 321.75 356.00 Td (America under the internally developed severely ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 342.80 Td (adverse scenario is forecasted using the estimates of revenues, losses, risk-weighted assets, and average assets. ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 329.60 Td (Common equity tier 1, tier 1, total capital, tier 1 leverage, and supplementary leverage ratios are then projected over ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 316.40 Td (the nine-quarter stress testing forecast period.) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 290.00 Td (The actual capital ratios as of the second quarter of 2019 and all projected capital ratios are calculated in accordance ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 276.80 Td (with the Federal Reserve's revised capital framework implementing Basel III and using Basel III standardized risk-) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 263.60 Td (weighted assets.) Tj ET Q endstream endobj 15 0 obj <> endobj 16 0 obj <> stream 1 0 0 rg /GS0 gs 24.50 779.00 12.00 -44.00 re f /GS0 gs BT /F2 20.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 1 0 0 rg BT 45.00 762.96 Td (HSBC North ) Tj ET Q q 1 0 0 rg BT 159.46 762.96 Td (America Holdings Inc.) Tj ET Q BT /F1 16.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 45.00 740.96 Td (2019 Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 333.87 740.96 Td (Act Stress ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 402.91 740.96 Td (T) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 411.56 740.96 Td (est Results) Tj ET Q BT /F1 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 9.00 Tf ET q 0 0 0 rg BT 571.50 47.80 Td (4) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 45.00 712.60 Td (4. Mid-Cycle Company-Run Str) Tj ET Q q 0 0 0 rg BT 197.88 712.60 Td (ess ) Tj ET Q q 0 0 0 rg BT 213.88 712.60 Td (T) Tj ET Q q 0 0 0 rg BT 220.21 712.60 Td (est Results HSBC North ) Tj ET Q q 0 0 0 rg BT 343.96 712.60 Td (America Holdings Inc.) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 449.99 712.60 Td ( ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 686.20 Td (The results of our ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 125.65 686.20 Td (2019) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 149.65 686.20 Td ( mid-cycle Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 255.04 686.20 Td (Act stress test are shown below) Tj ET Q q 0 0 0 rg BT 392.71 686.20 Td (. For HSBC North ) Tj ET Q q 0 0 0 rg BT 475.53 686.20 Td (America, the ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 673.00 Td (forecasts include prescribed assumptions, as required under the Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 381.63 673.00 Td (Act stress testing requirements, in respect ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 659.80 Td (of the capital actions projected over the planning horizon. ) Tj ET Q q 0 0 0 rg BT 301.38 659.80 Td (The initial quarter of the planning horizon reflects actual ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 646.60 Td (capital actions HSBC North ) Tj ET Q q 0 0 0 rg BT 170.26 646.60 Td (America has taken. For the remaining quarters of the planning horizon, the following ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 633.40 Td (assumptions are included: \(i\) no issuances or redemptions of regulatory capital instruments; \(ii\) no payment of ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 620.20 Td (common stock dividends based on previous year actual experience; and \(iii\) payments on any other regulatory capital ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 607.00 Td (instruments are equal to the stated dividend, interest or principal due on such instrument in any given quarter) Tj ET Q q 0 0 0 rg BT 523.38 607.00 Td (.) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 580.60 Td (The estimates should not be seen as forecasts of expected outcomes or capital adequacy or of the actual financial ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 567.40 Td (condition of HSBC North ) Tj ET Q q 0 0 0 rg BT 160.51 567.40 Td (America. ) Tj ET Q q 0 0 0 rg BT 203.67 567.40 Td (The forecasts for HSBC North ) Tj ET Q q 0 0 0 rg BT 340.23 567.40 Td (America may not necessarily be in alignment with ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 554.20 Td (those of other institutions or the Federal Reserve because of dif) Tj ET Q q 0 0 0 rg BT 323.39 554.20 Td (ferences in modeling techniques, methodologies and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 541.00 Td (assumptions made.) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 514.60 Td (The following tables show projected regulatory capital ratios, projected losses, revenues, net income before taxes and ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 45.00 501.40 Td (projected loan losses by loan type for HSBC North ) Tj ET Q q 0 0 0 rg BT 271.39 501.40 Td (America under the internal severely adverse scenario.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 45.00 476.20 Td (T) Tj ET Q q 0 0 0 rg BT 50.37 476.20 Td (able 1: HSBC North ) Tj ET Q q 0 0 0 rg BT 145.00 476.20 Td (America projected minimum regulatory capital ratios, Q3 2019 to Q3 2021, and the ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 45.00 463.00 Td (required regulatory minimum capital ratios for DF) Tj ET Q q 0 0 0 rg BT 280.05 463.00 Td (AST 2019) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 325.07 463.00 Td ( ) Tj ET Q 0.8666666666666667 0.8666666666666667 0.8666666666666667 rg /GS0 gs 224.50 452.50 85.00 -46.00 re f /GS0 gs 0.8666666666666667 0.8666666666666667 0.8666666666666667 rg /GS0 gs 224.50 406.50 85.00 -15.00 re f /GS0 gs 0.8666666666666667 0.8666666666666667 0.8666666666666667 rg /GS0 gs 224.50 391.50 85.00 -15.00 re f /GS0 gs 0.8666666666666667 0.8666666666666667 0.8666666666666667 rg /GS0 gs 224.50 376.50 85.00 -15.00 re f /GS0 gs 0.8666666666666667 0.8666666666666667 0.8666666666666667 rg /GS0 gs 224.50 361.50 85.00 -15.00 re f /GS0 gs 0.8666666666666667 0.8666666666666667 0.8666666666666667 rg /GS0 gs 224.50 346.50 85.00 -15.00 re f /GS0 gs 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 452.5 m 224.5 452.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 224.5 452.5 m 309.5 452.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 309.5 452.5 m 395.5 452.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 452.5 m 481.5 452.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 481.5 452.5 m 567.5 452.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 406.5 m 224.5 406.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 224.5 406.5 m 309.5 406.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 309.5 406.5 m 395.5 406.5 l s 1 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 406.5 m 481.5 406.5 l s 1 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 481.5 406.5 m 567.5 406.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 331.5 m 224.5 331.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 224.5 331.5 m 309.5 331.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 309.5 331.5 m 395.5 331.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 331.5 m 481.5 331.5 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 481.5 331.5 m 567.5 331.5 l s BT /F5 10.00 Tf ET q 0 0 0 rg BT 246.20 441.92 Td (Required) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 244.25 431.92 Td (regulatory) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 230.35 421.92 Td (minimum capital) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 254.25 411.92 Td (ratios) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 317.50 426.92 Td (Actual Q2 2019) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 430.00 440.42 Td (Stressed capital ratios) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 528.38 445.19 Td (1) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 418.80 417.42 Td (Q3 2021) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 501.90 417.42 Td (Minimum) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 542.46 422.19 Td (2) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 396.12 Td (Common Equity ) Tj ET Q q 0 0 0 rg BT 121.83 396.12 Td (T) Tj ET Q q 0 0 0 rg BT 127.66 396.12 Td (ier 1 capital ratio) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 255.10 396.12 Td (4.5%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 337.80 396.12 Td (13.2%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 426.60 396.12 Td (8.3%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 512.60 396.12 Td (7.9%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 381.12 Td (T) Tj ET Q q 0 0 0 rg BT 53.92 381.12 Td (ier 1 risk-based capital ratio) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 255.10 381.12 Td (6.0%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 337.80 381.12 Td (14.8%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 426.60 381.12 Td (9.9%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 512.60 381.12 Td (9.4%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 366.12 Td (T) Tj ET Q q 0 0 0 rg BT 53.55 366.12 Td (otal risk-based capital ratio) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 255.10 366.12 Td (8.0%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 337.80 366.12 Td (18.7%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 423.80 366.12 Td (14.1%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 509.80 366.12 Td (13.7%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 351.12 Td (T) Tj ET Q q 0 0 0 rg BT 53.92 351.12 Td (ier 1 leverage ratio) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 255.10 351.12 Td (4.0%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 340.60 351.12 Td (7.7%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 426.60 351.12 Td (5.3%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 512.60 351.12 Td (5.3%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 336.12 Td (Supplementary leverage ratio) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 255.10 336.12 Td (3.0%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 340.60 336.12 Td (5.8%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 426.60 336.12 Td (4.1%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 512.60 336.12 Td (4.0%) Tj ET Q BT /F1 11.00 Tf ET BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 306.35 Td (1 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 306.35 Td (The capital ratios are calculated using capital action assumptions prescribed under the Dodd-Frank ) Tj ET Q q 0 0 0 rg BT 420.13 306.35 Td (Act stress testing rules.) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 293.95 Td (2 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 293.95 Td (The minimum capital ratios represent the lowest projected ratio in the period Q3 2019 to Q3 2021, which do not necessarily occur in the ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 281.50 Td (same quarter) Tj ET Q q 0 0 0 rg BT 108.73 281.50 Td (.) Tj ET Q endstream endobj 17 0 obj <> endobj 18 0 obj <> stream 1 0 0 rg /GS0 gs 24.50 779.00 12.00 -44.00 re f /GS0 gs BT /F2 20.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 1 0 0 rg BT 45.00 762.96 Td (HSBC North ) Tj ET Q q 1 0 0 rg BT 159.46 762.96 Td (America Holdings Inc.) Tj ET Q BT /F1 16.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 45.00 740.96 Td (2019 Mid-Cycle Company-Run Dodd-Frank ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 333.87 740.96 Td (Act Stress ) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 402.91 740.96 Td (T) Tj ET Q q 0.5098039215686274 0.5098039215686274 0.5098039215686274 rg BT 411.56 740.96 Td (est Results) Tj ET Q BT /F1 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 9.00 Tf ET q 0 0 0 rg BT 571.50 47.80 Td (5) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 45.00 712.75 Td (T) Tj ET Q q 0 0 0 rg BT 50.37 712.75 Td (able 2: HSBC North ) Tj ET Q q 0 0 0 rg BT 145.00 712.75 Td (America projected losses, revenues and net loss before taxes for the nine quarters) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 538.48 712.75 Td ( ) Tj ET Q 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 702.25 m 309.5 702.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 309.5 702.25 m 438.5 702.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 438.5 702.25 m 567.5 702.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 672.25 m 309.5 672.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 309.5 672.25 m 438.5 672.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 438.5 672.25 m 567.5 672.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 552.25 m 309.5 552.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 309.5 552.25 m 438.5 552.25 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 438.5 552.25 m 567.5 552.25 l s BT /F5 10.00 Tf ET q 0 0 0 rg BT 335.95 684.67 Td (Billions of dollars) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 442.60 684.67 Td (Percent of average assets) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 558.78 689.44 Td (1) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 661.87 Td (Pre-provision net revenue/\(loss\)) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 189.73 666.64 Td (2) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 369.85 661.87 Td (\(0.79) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 392.65 661.87 Td (\)) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 502.15 661.87 Td (0.3) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 516.10 661.87 Td (%) Tj ET Q BT /F6 10.00 Tf ET q 0 0 0 rg BT 70.00 646.87 Td (less) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 631.87 Td (Provisions) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 373.15 631.87 Td (2.29) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 502.15 631.87 Td (0.8) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 516.10 631.87 Td (%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 616.87 Td (Realized losses/\(gains\) on securities \(AFS/HTM\)) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 373.15 616.87 Td (0.02) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 502.15 616.87 Td (0.0) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 516.10 616.87 Td (%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 601.87 Td (T) Tj ET Q q 0 0 0 rg BT 53.74 601.87 Td (rading and counterparty losses) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 190.49 606.64 Td (3) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 373.15 601.87 Td (1.16) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 502.15 601.87 Td (0.4) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 516.10 601.87 Td (%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 586.87 Td (Other losses/\(gains\)) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 373.15 586.87 Td (0.08) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 502.15 586.87 Td (0.0) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 516.10 586.87 Td (%) Tj ET Q BT /F6 10.00 Tf ET q 0 0 0 rg BT 70.00 571.87 Td (equals) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 556.87 Td (Net loss before taxes) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 369.85 556.87 Td (\(4.35) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 392.65 556.87 Td (\)) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 502.15 556.87 Td (1.6) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 516.10 556.87 Td (%) Tj ET Q BT /F1 11.00 Tf ET BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 540.30 Td (1 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 540.30 Td (A) Tj ET Q q 0 0 0 rg BT 68.83 540.30 Td (verage assets are calculated as the nine-quarter average of total assets.) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 527.90 Td (2 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 527.90 Td (Pre-provision net revenue includes losses from operational-risk events.) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 515.50 Td (3 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 515.50 Td (T) Tj ET Q q 0 0 0 rg BT 68.18 515.50 Td (rading and counterparty losses include mark-to-market \(MTM\) and credit valuation adjustment \(CV) Tj ET Q q 0 0 0 rg BT 439.15 515.50 Td (A\) losses resulting from the ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 503.05 Td (assumed instantaneous global market shock and counterparty default scenario component.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 45.00 476.65 Td (T) Tj ET Q q 0 0 0 rg BT 50.37 476.65 Td (able 3: HSBC North ) Tj ET Q q 0 0 0 rg BT 145.00 476.65 Td (America projected loan losses, by loan type for the nine quarters) Tj ET Q BT /F2 11.00 Tf ET q 0 0 0 rg BT 453.42 476.65 Td ( ) Tj ET Q 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 466.15 m 239.5 466.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 239.5 466.15 m 403.5 466.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 403.5 466.15 m 567.5 466.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 436.15 m 239.5 436.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 239.5 436.15 m 403.5 436.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 403.5 436.15 m 567.5 436.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 315.15 m 239.5 315.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 239.5 315.15 m 403.5 315.15 l s 0.9333333333333333 0.15294117647058825 0.1411764705882353 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 403.5 315.15 m 567.5 315.15 l s BT /F5 10.00 Tf ET q 0 0 0 rg BT 283.45 448.57 Td (Billions of dollars) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 432.85 448.57 Td (Portfolio loss rates \(%\)) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 533.44 453.34 Td (1) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 48.00 424.77 Td (Loan Losses) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 424.77 Td (1.97) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 473.60 424.77 Td (2.7%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 409.77 Td (First-lien mortgages, domestic) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 409.77 Td (0.10) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 473.60 409.77 Td (0.6%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 394.77 Td (Junior liens and HELOCs, domestic) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 394.77 Td (0.03) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 473.60 394.77 Td (4.2%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 379.77 Td (Commercial and industrial) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 185.60 384.54 Td (2) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 379.77 Td (0.81) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 473.60 379.77 Td (2.5%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 364.77 Td (Commercial real estate, domestic) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 364.77 Td (0.56) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 473.60 364.77 Td (4.9%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 349.77 Td (Credit cards) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 349.77 Td (0.29) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 470.80 349.77 Td (22.0%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 334.77 Td (Other consumer) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 141.69 339.54 Td (3) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 334.77 Td (0.03) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 470.80 334.77 Td (10.2%) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 70.00 319.77 Td (Other loans) Tj ET Q BT /F5 10.00 Tf ET BT /F5 6.50 Tf ET q 0 0 0 rg BT 121.69 324.54 Td (4) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 311.25 319.77 Td (0.16) Tj ET Q BT /F5 10.00 Tf ET q 0 0 0 rg BT 473.60 319.77 Td (1.5%) Tj ET Q BT /F1 11.00 Tf ET BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 303.25 Td (1 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 303.25 Td (Cumulative loss rates calculated over the nine-quarter planning horizon as a percentage of average loan balances \(excluding loans held for ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 290.80 Td (sale and loans held for investment under the fair) Tj ET Q q 0 0 0 rg BT 236.26 290.80 Td (-value option\).) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 278.40 Td (2 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 278.40 Td (Commercial and industrial loans include small- and medium-enterprise loans and corporate cards.) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 266.00 Td (3 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 266.00 Td (Other consumer loans include student loans and automobile loans.) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 45.00 253.55 Td (4 ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 63.00 253.55 Td (Other loans include international real estate loans.) Tj ET Q endstream endobj 19 0 obj <> /View <>>>>> endobj 20 0 obj <> /View <>>>>> endobj 21 0 obj <> endobj 22 0 obj <> stream xy\E7~n{{w'd'52 HaGPPA!"" b-&h,+TLy?:uk?uΩoH""?W~.Xv3&rm 2\jMgwm'CڴzlycǏ\ rBjx\DsV@{twocmC{Iwl11z:1m!t-\q3D.:yz'Wɨp[_F=>E"ǢӦ/|K&_~=!wn-az3¦h$7,ؑ2Oo_eSFLlk}Fg[F>|;