Stuart Thomson Gulliver - HSBC Holdings Plc Iain James Mackay - HSBC Holdings Plc

Tom Rayner - Exane BNP Paribas Ronit Ghose - Citigroup Global Markets Ltd. Alastair Ryan - Bank of America Merrill Lynch Rohith Chandra-Rajan - Barclays Capital Securities Ltd. Manus J. Costello - Autonomous Research LLP Joseph Dickerson - Jefferies International Ltd. Claire Kane - Credit Suisse Securities (Europe) Ltd. Raul Sinha - JPMorgan Securities Plc Natacha Blackman - Société Générale SA (UK) Fahed Irshad Kunwar - Redburn (Europe) Ltd. Martin Leitgeb - Goldman Sachs International

Good morning, ladies and gentlemen, and welcome to the Investor and Analysts Conference Call for HSBC Holdings Plc's Earnings Release for Q3 2017. For your information, this conference is being recorded. At this time, I will hand the call over to your host, Mr. Stuart Gulliver, Chief Group Executive. Stuart Thomson Gulliver - HSBC Holdings Plc: Thanks very much. So, good morning from London, good afternoon to everyone that's dialing from Hong Kong, and welcome to our third quarter results call. I'm here with Iain Mackay. We've made good financial and strategic progress since the half year, and Iain will run you through the details shortly. Today's call will focus on the numbers, but there's the usual slides on our strategic actions in the appendix of the investor deck outlining some of our achievements in the quarter. And I'll give a fuller update at the full year. I'm now going to hand over to Iain to take the rest of the call before we go to Q&A. Iain? Iain James Mackay - HSBC Holdings Plc: Thanks, Stuart. Our business has carried good momentum from the first half into the third quarter. Third quarter reported profit before tax is $4.6 billion, up $3.8 billion due largely to non-recurrence of a number of large significant items from the same period last year, including the impact of the disposal of our operations in Brazil. Adjusted profit before tax of $5.4 billion was broadly stable as higher revenue and lower loan impairment charges were matched by increased operating expenses, including continued investment in growth and higher performance-related pay. For the first nine months of the year, adjusted profit before tax was up 8%, and reported profit before tax was up by 41%. Growth in loans and advances translated into higher adjusted revenue in our three main global businesses. Retail Banking and Wealth Management had a good quarter, with strong revenue growth from the current account savings and deposits and further loan and deposit growth in Hong Kong, the UK and Mexico. Commercial Banking benefited from another strong revenue performance from Global Liquidity and Cash Management, particularly in Asia, and Global Banking & Markets continued to grow revenue despite a challenging quarter for the industry, demonstrating the benefits of its differentiated business model. It achieved this largely through growth in Global Liquidity and Cash Management, Equities and Securities Services, which exceeded the impact of subdued market activity on our banking and fixed income businesses. We grew lending by a further 6% across all our global businesses since the third quarter of 2016 or 8% excluding our U.S. CML portfolio and red-inked balances, mainly in term lending and mortgage balances in the Hong Kong and UK. We have completed 71% of our most recent $2 billion equity buyback as of 26th October and we expect to finish by the end of 2017. Looking quickly at some key metrics for the year-to-date. The reported return on average ordinary shareholders' equity was 8.2%. The reported return on average tangible equity was 9.3%. On an adjusted basis, we had negative jaws of 1.3%, reflecting the increased investment in business growth in the second and third quarters and we had tangible net asset value per ordinary share of $7.29. Slide 3 provides detail on the items that take us from reported to adjusted for both the third quarter and the first nine months of the year. The income statement for this year's third quarter includes no gains or losses relating to fair value and debt, whereas the comparable period in 2016 included a negative fair value movement of $1.4 billion. The reported results for last year's third quarter also included a $1.7 billion loss on the disposal of our operations in Brazil, as well as higher charges relating to our cost-saving programs and UK customer redress. The reported results for this year's third quarter included $104 million of releases in relation to legal settlements and provisions. You'll find more details of these adjustments in the appendix. The remainder of the presentation focuses on adjusted numbers. Slide 4 breaks down adjusted profit for the year-to-date by global business and geography. Adjusted profit before tax of $17.4 billion was up $1.2 billion or 8%, driven by higher revenue and lower loan impairment charges. Our business remains well-balanced, as the breakdown of global businesses demonstrates. Slide 5 looks at profit before tax for the third quarter, which was broadly stable compared to the same period last year. Profits were up in three out of five regions. The reduction in Europe's profit before tax was driven by higher interest costs in the holdings company, valuation differences in long-term debt and associated swaps, and the non-repeat of a 2016 UK bank levy credit in the Corporate Centre and increased costs in Global Banking & Markets including higher performance-related compensation. We had negative jaws of 4.9% in the third quarter. Slide 6 provides more detail on revenue. Our global businesses maintained the momentum from recent quarters, growing revenue by $540 million or 4% compared with last year's third quarter. I'll go through each business in more detail over the next few slides. Slide 7 looks at Retail Banking and Wealth Management which grew revenue by 6% compared with last year's third quarter. Wider spreads and higher balances in Hong Kong helped increase revenue from current accounts, savings and deposits by $312 million. Income from investment distribution increased by $86 million from higher sales reflecting the impact of renewed investor confidence. And we grew customer lending and customer deposits by 6% and 5% following strong performances in Hong Kong, the UK and Mexico. Revenue in Commercial Banking grew by 5% compared with last year's third quarter. Global Liquidity and Cash Management had another strong quarter, growing revenue by 16% through wider spreads and balance sheet growth in Asia. Credit and Lending grew by 1% as balance sheet growth in the UK more than compensated for the impact of margin compression in Asia. Global Trade and Receivables Financing revenue was also up slightly as growth in Asia and the UK more than offset the reduction from repositioning in Middle East and North Africa and spread compression in Asia. Slide 9 looks at Global Banking & Markets, which grew revenue by 2% compared with last year's third quarter. This was a good performance in spite of subdued trading activity across the market, thanks in large part to our diversified business model and continued market share gains. Market's revenues were broadly stable compared with last year's third quarter as a 25% increase in equities revenue all but eliminated the impact of lower fixed income revenues. Our transaction banking products continued to perform well from higher balances and higher spreads and deposits, particularly in Global Liquidity and Cash Management which grew by 19%. Global Private Banking revenue was broadly stable compared with last year's third quarter. We have now grown client assets in Global Private Banking in four consecutive quarters and seen positive inflows of $13.1 billion in our target markets since the start of the year. Revenue grew by 7% in our target markets in the third quarter, particularly in Hong Kong. Corporate Centre revenue fell by $220 million compared with the third quarter of 2016. The biggest driver was a $178 million reduction in revenue from our one-off U.S. CML portfolio as we all but completed the wind-down of the business. Balance Sheet Management revenue also reduced by $160 million. This is a consequence of repositioning activity and lower liquidity surpluses as we grew our lending across the group by $69 billion or 8% since last year's third quarter. Slide 12 looks at net interest margin, which was broadly stable from the half year. Net interest income of $7.1 billion was $137 million higher than the second quarter. Our net interest margin for the first nine months of the year was 1.63%, 7 basis points lower than 2016, excluding Brazil. This was mainly driven by lower asset yields, which reduced the year-to-date net interest margin by 5 basis points. This included a fall of 10 basis points, split broadly equally between the CML run-off and lower UK interest rate, which were partly offset by 5 basis points increase primarily due to loan growth in Mexico and Asia, the increased cost of debt and a negative impact of 5 basis points primarily related to MREL issuance. Conversely, wider deposit spreads from higher interest rates primarily U.S. and Hong Kong dollar rates raised the nine-month net interest margin by 5 basis points. There's a detailed slide on net interest margin in the appendix with more information on loan and deposit structures in HIBOR and U.S. dollar LIBOR trends. Slide 13 looks at operating expenses. We achieved a further $580 million of annualized cost savings in the third quarter, which helps support growth and absorb the cost of inflation and continued investment in regulatory and compliance programs. We had negative jaws in the third quarter, which largely reflects our decision to accelerate investments in business growth that we told you about at the half year. We remain committed to achieving positive jaws for the full year. Third quarter costs were $534 million or 7% higher than the same period last year, mainly due to increased business investment and higher performance-related costs. We invested $184 million in business growth in the quarter mainly in Retail Banking and Wealth Management, which was partly funded by the sale of our shares in Visa Inc. in the second quarter. We plan to invest around $200 million more in growth initiatives in the fourth quarter. Performance-related compensation was $324 million reflecting the strength of our year-to-date performance. The remaining expense growth came from continuing enhancement of our digital and IT security capabilities, marketing initiatives in Asia and a small number of one-off expenses. We expect to spend around $400 million of cost-to-achieve in the fourth quarter, in line with the guidance we gave you at the half year. We remain on track to hit our target annualized cost savings of around $6 billion by the end of 2017. Moving on to slide 14. Loan impairment charges were $448 million in the third quarter or 19 basis points as an annualized percentage of gross loans. Our credit standards remain robust and the credits outlook within our portfolio remains stable. Moving to capital on slide 15. The group's common equity tier 1 ratio was 14.6% on 30th of September compared to 14.7% on 30th of June. Our common equity tier 1 capital increased by around $900 million, which included $900 million of capital generation from profits net of dividends and scrip, $1.8 billion of favorable foreign currency translation differences, and the full impact of the $2 billion share buyback that we announced at the half year. Our 2017 Pillar 2A requirement is 3.5%, of which 2% is met by common equity tier 1. The increase of 60 basis points versus the 2016 requirement is mainly due to the reduction in risk-weighted assets between the end of 2015 and the end of 2016. Earlier this year, we committed to update you on the potential impact of IFRS 9. As many of you are aware, we can't give you the actual impact until it's adopted on January 1, 2018. That would depend on changeable factors such as the size of our balance sheet, market conditions and forward-looking macroeconomic assumptions, as well as our ongoing work on models, data and other improvements. However, recognizing those constraints, our current estimate is that we will see an increase in loan loss allowances of around $2 billion before tax, which would impact our common equity tier 1 ratio by fewer than 15 basis points. Note that this is the fully loaded impact and does not take into account any transitional relief that may be available. Slide 16 looks to our group returns metrics. The return on average ordinary shareholders' equity was 8.2%, and the return on tangible shareholders' equity was 9.3%. You can see from the slide the impact of significant items and the bank levy was to reduce returns by around 1.5%. Our global businesses are performing well and the strength of our global network continues to drive improving returns for the group. Organic growth in revenue and lending is increasing, and we are investing more in the business to support this growth. We are committed to delivering positive jaws for the full year, and we remain a well-funded business, with strong capital generation and a diversified balance sheet. We'll now take questions, and the operator will explain the procedure and introduce the first question. Operator?

Thank you, Mr. Mackay. Our first question today is from the line of Tom Rayner from Exane. Please go ahead. Tom Rayner - Exane BNP Paribas: Yes. Good morning. Good morning, gents. Two questions, please. Firstly, I guess, on costs, I wasn't expecting to be asking this at all, there'll be such a deluge of cost questions. But obviously, it makes sense not to try and manage your jaws on a quarter-to-quarter basis, I guess and hence, the sort of negative jaws in Q3. Maybe we shouldn't overreact to, but I'm trying to get a sense, you're obviously reaffirming positive jaws for 2017. Can you say anything about the sort of jaws going beyond this year into 2018, 2019? I am conscious as well, we have a new Chief Executive coming next year, so maybe that limits how far ahead we can look, but I just wondered if you could give us some update on your thoughts on jaws beyond this year and then I have a second question on impairments, please. Stuart Thomson Gulliver - HSBC Holdings Plc: Yeah. Tom, it's Stuart. So, look, I think you're absolutely right that we also believe it makes no sense to manage a firm this size and scale to jaws on a quarterly basis. We've kind of managed it to a much longer time series until you look at jaws on a calendar year basis, and we've recommitted that we're working to hit positive jaws for calendar year 2017. How's 2017? It will again remain the case, so the group will be committed to work towards positive jaws. And as you say, managing on a quarterly basis creates a distortion. We have to invest for the future of the business and we had a number of investments into digital and so on during that quarter. We also had good strong performance in revenues in certain businesses where we needed to top up the compensation which is direct results of increased revenues. So, yes, you need to think about jaws on a calendar year basis and the commitment to positive jaws will continue. Tom Rayner - Exane BNP Paribas: Okay. Thank you. Just on the impairments, I think if I ask you sort of – or Iain what the normalized impairment rate for HSBC, you should probably tell me 40 basis points, yet we've had another quarter of sub-20 basis points and I look at gross charge and that sort of earnings somewhere in the sort of mid-30s and releases at about 15 basis points. It doesn't feel like that's particularly unusual level of releases and recoveries. So, I'm just trying to get a sense of whether normalized is changing or is likely to change at any point given that we've sort of derisk – you've derisked the group underwriting standards, I guess, would change post the financial crisis that we live in a lower rate world that your mix is different. I mean, is there any thoughts about what normalized actually means for HSBC given everything we know today? Iain James Mackay - HSBC Holdings Plc: Yeah. As you quite rightly said, Tom, we've debated this one with yourselves and the wider community at great length. You continued to see very stable credit performance across our portfolios this quarter as you've seen over recent quarters. The underwriting standards across the businesses remains very consistent and you know the prudence that's embedded within that. This quarter, we've got about 19 basis points LICs as proportion of gross loans and advances. And the only area in which we saw a slightly higher loan impairment charges within the UK and even there, it represented 18 basis points of gross loans and advances to customers. So, across our portfolios, we're seeing a very stable picture. And as in previous quarters, Tom, I very much guide the market to look at this performance over a number of years and certainly extend well beyond sort of 8 or 12 quarters in terms of getting a sense of what normalized credit costs are that incorporate some of the changing conditions within the credit cycle. So, I won't say this is guesswork, because clearly we've got a very strong connection with our risk colleagues across the group in terms of how we underwrite business and what the emerging trends are. But what I can say is that we continue to see stable performance at both across the global business profile as well as the geographies. Tom Rayner - Exane BNP Paribas: Okay. Thank you very much. Iain James Mackay - HSBC Holdings Plc: Thanks, Tom.

Our next question comes from the line of Ronit Ghose from Citigroup. Your line is now open. Ronit Ghose - Citigroup Global Markets Ltd.: Hi. Good morning. I just had a couple of questions related to margin, please. Thanks for the extra disclosure you're giving now on margins. Can I ask you, what was your exit run rate on the NIM? So the 1.64% that's gone down to 1.63%, would it be closer to 1.60%, 1.61% as an exit run rate? Iain James Mackay - HSBC Holdings Plc: Yeah. That's about right. It's about 1.61% coming out of the quarter, and the key drivers, Ronit, across that was exactly what we described in the call here. We saw a slightly wider margins in the liability side in the balance sheet, a little bit of compression coming through the corporate both in Commercial Banking and Global Banking & Markets spreads both in the UK and Asia to a lesser extent, continued margin spread on the mortgage product in the UK, but again, very, very muted as has been the case in previous quarters, and that has been largely offset by expanding net interest margin. I think the other thing to take into consideration, which will be a dwindling influence in net interest margin, is the run-off of our Consumer and Mortgage Lending business in the U.S. We're now down to $300 million of unpaid principal balances. We would expect to see that gone by the end of this year, early next year. So, the number of quarters in which you will see a negative impact to net interest margin from the CML business is pretty numbered now. I think it's probably one or two quarters, probably at most. And then the only other feature that's in NIM is slightly higher costs of holding company debt as we continue to issue in line with regulatory requirements and guidance that we provided around minimum requirements and eligible liabilities. That's really – it's a pretty stable picture from a NIM perspective, and if you take the holding company debt out of it, it's broadly speaking, liability expansion on the liability side, margin expansion on the liability side, and a little bit of compression on the asset side. Ronit Ghose - Citigroup Global Markets Ltd.: Right. Thanks for that, Iain. And if we took the holding company debt or the TLAC out, does the – if you just looked at the liability spread widening versus the asset spread pressure, on the asset spread side, how much of this is a mix effect versus at a product-by-product level, you're still seeing asset spread pressure, i.e., you're growing fast in mortgages you called out in your presentation deck. I'm just wondering, is there within the mortgage piece material fund book, back book margin difference in the UK and Hong Kong? Similarly in Corporate, I think in the Global Banking space, you said there's still margin pressure including in Asia. So, I'm just wondering, how much of this is a product level versus asset mix level? Iain James Mackay - HSBC Holdings Plc: It's pretty muted, Ronit. In terms of major difference between the UK front book, back book and mortgages, it's really pretty muted, nothing significant. When you look at the compression in that product, you're literally talking about a couple of basis points, if that, in any given quarter. It continues to be an extremely attractive and a profitable product for the group, and the same is true within the Hong Kong and wider Asian in context. The compression that we're seeing in corporate lending again is you're in the single basis point-type territory. So, broadly speaking, what we're seeing is an offset between liability margins and asset margins in the round. There is no particular standout feature on any particular product within the group. Ronit Ghose - Citigroup Global Markets Ltd.: Right. Thank you. That's clear. Thank you, Iain. Iain James Mackay - HSBC Holdings Plc: Thank you.

Our next question today comes from Alastair Ryan from Bank of America. Your line is now open. Alastair Ryan - Bank of America Merrill Lynch: Thank you. Good morning. So, two on revenue growth, please. First, it looks like volumes are broadening. So, you've been a very Asian-driven business for the last few years. Is that fair that as mortgages start to kick in in the UK, Mexico is growing, the run-off's finished in North America, that you've got a broader front of volume growth than you had before? And then second, back to the net interest margin and again, thank you for the disclosure. I note that HIBOR's started going up for almost exactly when Stuart predicted it would, and we may get a base rate rise in the UK, dollar LIBOR's a bit higher every day. At what point, now that MREL issuance is pretty much done, should that deposit spread expansion be outweighing the asset spread compression you've discussed? Thank you. Iain James Mackay - HSBC Holdings Plc: Okay. Thanks, Alastair. From a revenue perspective, we've had pretty good spread across the different businesses in the geographies. As you see from our numbers, you've got good revenue growth coming through Retail Bank, Wealth Management. That's informed by balance build both in the UK and in Hong Kong and mortgages. Further afield, we see improvements also in the rebuild of our Mexican business. When you look at Commercial Banking and Global Banking & Markets, very strong performances in Global Liquidity and Cash Management across both of those global businesses. And then within Commercial Banking, we continue to see a build in Credit and Lending with about 1% to 2% growth within that here, and again, that's most noticeable within the UK, Hong Kong and mainland Chinese markets. When you look at Global Liquidity and Cash Management, again, very strong growth in the first half of the year. Growth in the third quarter more in line with the guidance that we provided to you at the half year but again, as we rebuild businesses, we see improvements within Mexico, within Canada, further afield within the Asian businesses looking away from Hong Kong and Mainland China. So, I think broadly speaking, as you're aware country-by-country, there is good news in the vast majority of the markets in which we're operating and certainly across the three main global businesses that we've referenced in the earnings release there also. On net interest margin, you're absolutely right in terms of improvements in HIBOR, which we're beginning to see come through the deposit base in Hong Kong as the gap between HIBOR and U.S.-dollar LIBOR tightens up. It's not quite exactly aligned at this point, but it continues to move in the right direction. If one were to assume that we get a base rate change in the UK in the month of November, that would clearly translate positively into the UK net interest income position. I mean, broadly speaking, if you thought about an increase of 25 basis points in the month of November, that would broadly translate into about $45 million worth of increased net interest income in the fourth quarter for the UK business as an example. On the MREL question, we certainly are in good position, and that we're not finished. We'll continue to issue into the market when the conditions are particularly advantageous to us. And as you know, we've had some very good outcomes from the issuance that we've done over the course of this year and last. But I think, broadly speaking, if we see a couple more rate increases from the Fed and we start seeing the Bank of England bank rate moving in the right direction, and then the NIM expansion that we see in liabilities will more than compensate, we would expect, for some spread compression in the asset side and the cost of MREL. Alastair Ryan - Bank of America Merrill Lynch: Thank you. Just one follow-up if I may on Balance Sheet Management. Rude not to ask while Stuart's here. I mean, we would expect it to go down a bit in periods where short rates are rising, I think that's quite natural. But what – your famous $2.5 billion to $3 billion on a 12-month or a longer-term view, any comments, please. Stuart Thomson Gulliver - HSBC Holdings Plc: So, I guess – yeah. So, I think we're still looking at $2.5 billion to $2.7 billion for this year, 2017, next year, lower. So, probably kind of $2.3 billion to $2.5 billion something around that because you're absolutely right, Alastair, if you remember as rates go up, Balance Sheet Management will make less because of the shape of the book. Commercial Banking and Retail Banking and Wealth Management will make more. Alastair Ryan - Bank of America Merrill Lynch: Thank you. Iain James Mackay - HSBC Holdings Plc: Thanks.

Our next question today comes from Rohith Chandra-Rajan from Barclays. Your line is now open. Rohith Chandra-Rajan - Barclays Capital Securities Ltd.: Hi. Good morning. I had a couple as well, please. Just want to follow up on the margin question. I guess, if I look at your disclosure – and I appreciate it's relative to a parallel shift in the yields curve, but if I put through a 25-basis-point rise in U.S. and UK rates, that would do like sort of a $450 million to $500 million benefit next year. Just wondering how much of that you think would be offset on the asset margin side. So, that would be question one. I think question two, just to clarify the cost guidance, so the $7.3 billion run rate as we exit this year. You're talking about another $0.2 billion investment spend, I think, in the fourth quarter. Presumably, that $7.3 billion excludes the $0.2 investment spend. I just want to clarify those two points, please. Iain James Mackay - HSBC Holdings Plc: So, on NIM, you're – so, the broad base of your interpretation around 25 basis points in UK and U.S. rates, it's in the right ballpark, Rohith. In terms of how much of that maybe eroded away in the asset side, I think that's a pretty difficult one to guide on, right? It's going to be very much informed by market dynamics, economic development. We've obviously, within the UK market, got an interesting couple of years ahead. It was exactly how that translates into customer behavior across each of our main businesses, is really difficult to say. So, I would be hesitant to give you any guidance on that point right now, but I think you can be rest assured, we'll give you as much insight as we can on a quarterly basis as we see the numbers coming through. From a cost perspective, very much targeting the exit rate there of $7.3 billion at the fourth quarter on a constant-currency basis in line with the guidance. You've picked up on, obviously, what you add to that in terms of run rate is the bank levy, which this year or next year, broadly speaking, is going to be about $1 billion, slightly less. If you then think about the investment that we've done over the second quarter, what we've signaled for the third quarter, we are in a growing revenue environment. We have the capital available to support that growth and it's clearly important that we maintain the investment around investing for that growth. So, whilst in that environment, we'll continue to invest across each of the main global businesses and the repositioning of our private bank. So, what you shouldn't take away from this is that we're targeting in a growth environment with momentum, a flat cost picture. We will hit the exit rate that we talked about, we'll deliver the savings that we talked about, but we absolutely will continue to invest to support our businesses. And we'll give you the guidance as we work through that, from a quarterly perspective going forward. But you can see the $200 million that we've talked about, that is not included in the $7.3 million (sic) [$7.3 billion] (28:35) exit run rate that we're referencing on our charts today. Rohith Chandra-Rajan - Barclays Capital Securities Ltd.: Okay. Thanks, Iain. So I guess, what you're reminding us on cost is that we should think about positive jaws rather than specific cost numbers as we go forward? Iain James Mackay - HSBC Holdings Plc: Yeah. Think about positive jaws and think about the positive jaws in the context of 1.5 points to 2.5 points, not 5%, 6%, 7%, 8% positive jaws. If we're in that kind of environment, we're clearly growing revenues, we'll continue to invest in the capability of our businesses across digital, across process efficiency, the product and service offering to our customers and the footprint that we've got. So, positive jaws is absolutely what we would guide you to, but I would exercise a little bit of caution about going up into the higher digits in positive jaws. Because that would certainly indicate growing market, an opportunity to invest into that growth and to support that momentum. Rohith Chandra-Rajan - Barclays Capital Securities Ltd.: Thank you very much. Iain James Mackay - HSBC Holdings Plc: Thank you.

Our next question comes from Manus Costello from Autonomous. Please go ahead. Your line is open. Manus J. Costello - Autonomous Research LLP: Thank you. Good morning, everyone. I had a couple of questions, please. On capital, first of all, I wondered if the increase in your Pillar 2A, it's going to be permanent, I would have thought, or certainly linger for some time. So, when will you give us an update on your 12% to 13% CET1 ratio guidance? I know you said you'd be above it for a period, but thinking about the Pillar 2A increase and presumably your stress test drawdown will go up as well given that you've got lower RWAs as well. I just wondered if you could clarify what you see as the go-to CET1 ratio now? And then on costs, my question was about the $300 million top-up that you put through in the quarter for compensation. I wonder why that didn't come through in the first half. Why top-up in Q3? Thank you. Iain James Mackay - HSBC Holdings Plc: Let me take the last question first, Manus. The adjustment to the compensation was really a reflection of year-to-date. We strengthened our provisioning for performance-related compensation in each of the first, second and the third quarters. And then spent some time with Stuart and the team looking at the overall performance through the first three quarters of the year and then adjusted accordingly for that. So, there's clearly a component that addresses first-half performance, which was strong, and then reflects a year-to-date update in that overall scheme of things. Manus J. Costello - Autonomous Research LLP: And is that something that we should – is there always something that goes on over the summer with that? Should we sort of look out for Q3 being a point where there's catch-ups on bonuses? Iain James Mackay - HSBC Holdings Plc: No. Not necessarily. I think perhaps what has differentiated 2017 with previous years is that we have had consistently strong performance. If you reflect in the third quarter of last year, Manus, it was a pretty tough quarter for our numbers from an overall reported and frankly from an adjusted perspective. So, our reflection from a performance-related pay is exactly that. It's related to performance of the business in terms of revenue and profit generation. Manus J. Costello - Autonomous Research LLP: Okay. Thanks. Iain James Mackay - HSBC Holdings Plc: Okay. On capital, look, the Pillar 2A now takes the overall common equity tier 1 requirement to 11.4%. We've been very consistent in targeting our common equity tier 1 ratio between 12% to 13% and to the top end of that range, sitting around 13%, that's 1.5 point or so of buffer within the common equity tier 1 space of our management buffer over and above capital conservation, countercyclical, G-SIB and so on and so forth. So, we continue to have the view that around the 13% range, the top end of the range from the 12% to 13% is an appropriate place for us to have the capital. Now, other thing that I'd bring out on the individual capital guidance and the update to the Pillar 2A is within actual dollar terms, the capital requirement has gone down, and that is largely that the rate increases informed by the fact that we have frankly been very successful taking our risk-weighted assets down between the end of 2015 and 2016. And the Pillar 2A is informed by an annual ICAAP. The ICAAP is built off the year-end risk-weighted assets position and correspondingly, that significant increase between the end of 2015 and 2016 translates into a higher weight but, in actual fact, lower dollar requirement from an overall ICG perspective. So, look, that's the take, but I think sitting above the 13% top end of the range at this point, we clearly have a very strong capital position. And even progressively bringing it back in to the 13% range, we'll continue to sit with the strong management buffer. And clearly as we continue to improve capital management and risk management across credit, traded risk, operational risk and the other risks which are considered within Pillar 2A and gives us the opportunity to work with the regulators to move those numbers both down as well as up. Manus J. Costello - Autonomous Research LLP: Okay. Thank you. Stuart Thomson Gulliver - HSBC Holdings Plc: Thank you, Manus.

Our next question is from the line of Joseph Dickerson from Jefferies. Go ahead, your line is open. Joseph Dickerson - Jefferies International Ltd.: Hi. Good morning, gentlemen. You've basically targeted about $500 million of investments spend in the second half of the year. I guess, how do you think about the return on that discretionary investment in terms of revenue? And then secondly, is there any offset to this from regulatory costs coming down? I noticed they were down about $100 million quarter-on-quarter in Q3. Any color on those two items would be appreciated. Many thanks. Stuart Thomson Gulliver - HSBC Holdings Plc: In terms of investing, any investment decision is taken with a focus on the return on investment targets that we've set – the return on equity targets that we've set for the business and specific focus around return on risk-weighted assets, return on tangible equity within those businesses and the opportunity to move that number north the group (34:41). A significant proportion of the investment that we've targeted in the second half of the year has been on Retail Bank and Wealth Management. There is a high return equation within those businesses and at this point in time that's where a significant share of investment is going. So the decisions are informed by return metrics on a project-by-project basis and within each geography and within each global business. And I think that's certainly what the market would expect from an investment decisioning and capital allocation perspective. In terms of overall regulatory costs, they remain broadly consistent across the piece. So, reasonable stability within what we see from a financial crime risk management perspective. We would expect to see, as time moves forward, the marginal benefits of the productivity from a digital perspective within financial crime risk management. So we've deployed globally platforms around transaction monitoring supporting KYC. And overall, as those become more embedded and finely tuned, we would expect to see some productivity. But I think it's fair to say that over certainly the next few quarters, it would be reasonable to expect broad based stability within that numbers. So when you think of some of the dynamics, some continuing implementation of regulatory requirements around the Basel III regime or CRD IV within Europe, a continued embedding of the financial crime risk requirements, continued emphasis from our regulators around things like stress testing, solvent wind down, recovery and resolution and all of that expenditure falls within the overall regulatory spend bucket. So you will have a little bit of variability quarter-to-quarter, but I think for the next couple of quarters, I think stability is a reasonable position to reflect on. Joseph Dickerson - Jefferies International Ltd.: Thank you. Stuart Thomson Gulliver - HSBC Holdings Plc: Thank you.

Our next question today is from the line of Claire Kane from Credit Suisse. Please go ahead. Your line is open. Claire Kane - Credit Suisse Securities (Europe) Ltd.: Hi. Good morning. Could I have three quick ones? The first just to clarify on the investment spend. Should we take the, I think it's $400 million that you're doing for the second half this year and just annualize that going forward? Is that the best run rate? The second one, just on – clarify the NIM commentary you mentioned. In terms of some of the allocation of the funding costs, I think, like you said, you have a U.S. CML drag. But overall, are we expecting funding costs to go higher from here? So even though you've had a negative in that division from the assets running off faster, will we actually see any benefit from that running away if those funding costs just get allocated to other divisions? And then my final question is just a follow-up on the capital. Earlier this month, we had a paper from the PRA about group policy. And just wondered if you foresee any implications on your 13% target from the requirement to consider the local capital requirements of your main subsidiaries. And on that, if there's any update on the down-streaming of capital to the UK subsidiary. Previously you mentioned it could be $1.5 billion to $2 billion. Thank you. Iain James Mackay - HSBC Holdings Plc: Okay. So I'll take those in reverse order. From a UK subsidiary capital requirement, the ring-fenced bank broadly speaking, based on our current understanding, the common equity tier 1 requirements and overall capital requirements, we'd expect to be broadly consistent with what we've said from a group perspective, so in the region of 12% to 13%. MREL requirements in the group, you've seen the guidance from the PRA. So at the local level, I think it's two times Pillar 1 plus Pillar 2 or two times the leverage ratio calculated on a local regulatory basis. And I think that, again, remains broadly consistent, maybe slightly higher than the consolidated group picture from an MREL perspective. So, really no change and no specific or broad divergence from the group guidance as it relates to the UK main operating subsidiaries. In terms of U.S. CML impact on net interest margin, clearly we've got the higher-yielding assets running off. And broadly speaking, that will be done just either (39:05) by the end of the year or early next year. We do have some residual liabilities on that balance sheet which we will manage out over the course of the next two to three quarters and really have a clean and zeroed balance sheet from a U.S. HSBC Finance Corporation perspective I would suspect no later than the middle of next year. So we may have a couple of basis points impact, if that, on net interest margin from a cost of funding perspective, but not particularly significant. And then lastly on your investment, annualizing that is broadly speaking, in terms of working on the old spreadsheet front, is probably not a crazy idea, but again, the investment will be informed by the opportunity to invest for improving profitability. It will be informed by positive jaws. So when we're in a growth environment, we'll invest to support the momentum around that growth. Where that growth environment to reverse, then our focus will be on constraining costs such that we continue to deliver positive jaws. Stuart Thomson Gulliver - HSBC Holdings Plc: All of these investments are subject to very detailed cost and investment board process. So this money just doesn't get easily spent. And as Iain says, our attitude to expenditure will also be defined on how the overall operating environment is and how the firm is doing. So, yeah, from building a spreadsheet, yes, it may make some sense, but understand that we'll reverse it pretty quickly if we need to reverse it pretty quickly and no money is spent without us being able to see significant financial benefit to the group. Claire Kane - Credit Suisse Securities (Europe) Ltd.: Thank you. That's great. Stuart Thomson Gulliver - HSBC Holdings Plc: Thanks, Claire.

Thank you. Our next question is from Raul Sinha from JPMorgan. Please go ahead. Your line is open. Raul Sinha - JPMorgan Securities Plc: Hi. Thank you. Can I have two, please? Just the first one on the UK. Could I ask you to comment a little bit on your UK loan growth appetite particularly in the mortgage market as you've seen some decent growth picking up? And there's clearly an expectation that the intermediary platform, as it comes online, will drive potentially more higher market share and maybe a bit more net loan growth than we've been seeing in that business in the past. So, could you give us a sense of what magnitude of growth we should expect in this area and against that, what would you actually view the outlook for UK risk currently? Iain James Mackay - HSBC Holdings Plc: No. At the current time, the UK credit portfolios across the businesses are pretty stable. We talked about this a little bit earlier, Raul. So there's nothing to add on that front. In terms of market share at the end of second quarter, we were about 7% of the UK mortgage market. We've certainly grown into that during the third quarter, putting over $2 billion of new mortgage balances on, and the underwriting trick here around that remains pretty prudent. New business LTVs are just over the 60% mark, the portfolio overall is 40%. And as we continue to increase the number of intermediaries that we engage with, we're now seeing about 68% of the intermediary market. In terms of the direct market, i.e., through the branch network, we're seeing probably about 20% – we're probably about 20% of the market in that regard. And overall, we're somewhere north of 7% now. So the profitability of the product, the overall risk positioning of the product in the marketplace and the pricing, it's an attractive product. The new platform I think is going live early in the fourth quarter. So we should see some benefits accruing from that as well, but the appetite for this product remains fairly well-positioned within the group. And again, as I say, it's a prudently underwritten portfolio but with good returns attaching to it. Stuart Thomson Gulliver - HSBC Holdings Plc: There's also quite a detailed slide in the appendix, slide 26 on UK credit quality. Raul Sinha - JPMorgan Securities Plc: And in terms of the margin implications of that, can I sort of assume that you're very happy to trade off the attractive returns the UK mortgage product throws off against the fact that obviously it's going to be quite dilutive for the margin from an asset perspective? Iain James Mackay - HSBC Holdings Plc: Well, you've seen certainly in the last couple of quarters, sort of about 1 basis point of net interest margin erosion emanating from the UK mortgage book. So it is absolutely clear that there is a lot of competition, plenty of liquidity chasing mortgage product in the UK right now, but notwithstanding some of that pricing competitiveness, this remains a very profitable product within the group and within the UK business. Raul Sinha - JPMorgan Securities Plc: Great. Thank you. Can I just ask second one on HIBOR? Obviously, great call on the move up, but I guess, most of that move up in the Hong Kong three-month HIBOR obviously was towards the end of the quarter. Can you talk a little bit about how actually that flows through in terms of the net interest income within the Hong Kong business? I mean, is the sensitivity here driven predominantly by the liability side or is there an asset size kicker that comes in with a lag as well? Iain James Mackay - HSBC Holdings Plc: Right. So there is liability benefit clearly to-date within Hong Kong that's largely been driven by U.S. dollars because we have a significant U.S. dollar liability base in Hong Kong as well as Hong Kong dollars and renminbi. However, the mortgage portfolio in Hong Kong is almost exclusively a variable rate mortgage portfolio. And progressively, we'd expect to see rates move up in HIBOR reflected in re-pricing on the mortgage book as well. So in Hong Kong, where we have a very significant, virtually all of the mortgage portfolios are variable-rate products, whereas in the UK we've got quite a significant portion which is a fixed rate product. So we will see it coming through both asset and liabilities in the Hong Kong balance sheet as you see over time greater conversions between U.S. dollar LIBOR and HIBOR. Raul Sinha - JPMorgan Securities Plc: All right. Thanks very much. Iain James Mackay - HSBC Holdings Plc: Thank you, Raul.

Our next question is from the line of Natacha Blackman from Société Générale. Please go ahead, your line is open. Natacha Blackman - Société Générale SA (UK): Good morning. Thanks for taking my question. I just have a quick one on funding. Would you be able to comment on where you are in your plans for this year, particularly in HoldCo senior I assume you have no more AT1 or T2 to do. Thank you. Stuart Thomson Gulliver - HSBC Holdings Plc: Look, we absolutely are on track in terms of meeting our goals from an AT1, T2, MREL/TLAC perspective, Natacha, but what you've also seen is that when the market conditions are particularly conducive from a pricing and from size of issuance opportunity by different currencies and different markets, we've been happy to issue into that. And as you also have seen, the product has been extremely well-received by the marketplace over the last few quarters. And our treasury and DCM teams have done a great job writing into those markets. So, I think, we will continue to approach the market fairly opportunistically. We know what we need to accomplish, broadly speaking, over the course of the next two or three years. And if we can prefund at a particularly attractive rate, then we will continue to do so. Natacha Blackman - Société Générale SA (UK): Okay. Sure. But for AT1, are you able to issue if you're doing a buyback, I mean surely I think that's... Stuart Thomson Gulliver - HSBC Holdings Plc: Not this year, but to the extent, we would do any future buybacks, we would look to find a way to possibly restructure those, such that if the market was particularly conducive to AT1s, we'd be able to issue into it, but under the current buyback scheme, you're correct. We're unable to issue AT1s. Natacha Blackman - Société Générale SA (UK): Okay. Thank you.

Thank you. Our next question is from Fahed Kunwar from Redburn. Please go ahead, your line is open. Fahed Irshad Kunwar - Redburn (Europe) Ltd.: Good morning. Thanks for taking the questions. Just a couple of questions. The equity performance in the Markets business was exceptionally strong, particularly versus your peers. What products did you take market share in or was there any positioning gains within that revenue line? And then the second question was just going back to the jaws point. I think you talked about 3% jaws being feasible kind of going forward and I think follow (47:19) consensus, it has kind of around 4% jaws going forward. Is that still the right kind of positive jaws or is that too high or too low? Any kind of help would be very good. Thank you. Iain James Mackay - HSBC Holdings Plc: Okay. Thanks, Fahed. Look on the equities front, really strong performance in the Prime space, especially in Asia, and that's really the standout performance in the quarter on the equities front. And on a year-on-year basis, that represented 25% up, but it was largely within Prime and mostly within the Asian business. On jaws, I think guiding 3% to 4% is probably a little bit too sporty from a jaws' perspective. I think if you're talking 1.5%, 2%, 2.5%, and again in a growth environment going back to Stuart's comments earlier where we see momentum around growth within our key markets at an attractive returns level, then we would continue to invest into that, and therefore, our behavior on cost will be informed by generating positive jaws on an annual basis, but positive jaws of 1 to 2 points. Going beyond that, I think it really starts to question whether we're appropriately investing and supporting growth in the business. Fahed Irshad Kunwar - Redburn (Europe) Ltd.: Very helpful. Thank you. Iain James Mackay - HSBC Holdings Plc: Thank you.

And we would take our final question today from Martin Leitgeb from Goldman Sachs. Please go ahead, your line is open. Martin Leitgeb - Goldman Sachs International: Yes. Good morning. I just have two questions, please. One is a follow-up on UK mortgages and one on Brexit. And just looking a little bit in more detail on mortgages. It seems like that growth in the third quarter has accelerated from around 5% in the first half to around 9.8% in the third quarter. And I think the implied share in gross mortgage lending is now at around 9% or even slightly higher. I was just wondering if you could shed a little bit of light on how much of step change the new platform for intermediaries will be in that mortgage origination going forward? Once that becomes live and should we expect that gross share to edge up meaningfully higher from here and I think you hinted that this might go double-digit from here. So I guess it's low-teens or mid-teens from here? And the second question with regard to mortgages is risk appetite. And as you mentioned your loan-to-values in terms of new business are significantly below what the competition is and I was just wondering do you see there any scope to edge a little bit higher in terms of this average loan to values or it's essentially should we think about that risk profile to stay broadly stable from here? The second one on Brexit is just a general question whether you see any form of, or any change in customer behavior in the UK whether that's on the corporate side in terms of delaying some investment decision, and hence less corporate loan demand or whether that's within the investment bank whether you see increased demand for using your French legal entity as a booking center for, say, Continental European clients? Thank you. Stuart Thomson Gulliver - HSBC Holdings Plc: Thanks, Martin. So, I'll take the second question first. In terms of UK customer behavior across Commercial Banking, Global Banking & Markets, and perhaps as you expect just a little bit of caution, but is it really showing up in a fundamental shift in change of behavior or, for that matter, impact in the performance as how that translates through to our business, I think the question is probably, no, is there a caution and a great deal of deliberation around decision making by certain segments of our customers, then I think that would be an accurate statement when we discuss either with Noel Quinn or with Ian Stuart in terms of what they are seeing in the UK customer base, but is it ground-shifting, certainly, not at this point in time. Going back to UK mortgages, I think, overall, we're probably seeing market share probably around about the 8% mark right now. In terms of the role of the new platform, clearly facilitating mortgage underwriting, speeding up cycle times, that clearly we would expect it to have some impact. However, I think what is more telling is the extent of market coverage that we're getting in terms of compounding what we see through the branch network with the number of intermediaries that we work with. And over the course of the last two years, as you can see, we've significantly increased our engagement with intermediaries. We're seeing much more of that market, probably approximating, certainly, approaching 70% of the intermediary market now. And that is seeing a great wide (51:55) of opportunities to underwrite within our risk appetite is one of the contributing factors to continued growth in that product line. The platform will clearly facilitate that in terms of interaction with our customers. In terms of risk appetite, we've got a pretty well-distributed book across the various loan-to-value ratios. So, yes, we've got a – obviously got the overall portfolio at 40%. We've got a higher proportion of lower than 50% LTV mortgages within the portfolio, but we also have segments going all the way up to 90% and less from an LTV perspective. And the pricing and risk management is reflected appropriately with that segmentation. So, is that a broad-based opportunity for change within risk appetite? I suggest probably not given that we've continued to build market share reasonably successfully with a profitable product offering in the UK with the appetite that we have. Martin Leitgeb - Goldman Sachs International: Thank you very much. Stuart Thomson Gulliver - HSBC Holdings Plc: Thank you very much, Martin. Stuart Thomson Gulliver - HSBC Holdings Plc: And I think with that, that was our last question. So, thank you very much for joining us today.

Thank you, ladies and gentlemen. That concludes the call for the HSBC Holdings Plc earnings release for Q3 2017. You may now disconnect.