The analyst and investor webinar on the third quarter 2024 results for HSBC Holdings PLC will begin in two minutes. Following the presentation, there will be the opportunity to ask your questions. For analysts and investors joining via the Zoom link provided, please use the Raise Hand function in Zoom to register your interest in asking a question. You may raise your hand now or at any other time during the call. Please ensure your camera is also turned on. If you're invited to ask a question, please accept the prompt to unmute your line. Please note that it will not be possible to ask a question if you are joining via the webcast link on HSBC's website. Welcome, ladies and gentlemen, to the analyst and investor webinar on the three Q twenty twenty-four results for HSBC Holdings PLC. For your information, this webinar is being recorded. I will now hand over to Georges Elhedery, Group Chief Executive. Thank you, Louise. Hello, everyone. Thank you for joining today. I'm here with John Bingham, our Group Financial Controller, who's acting as Interim Group Chief Financial Officer. We delivered another good quarter, which shows that our strategy is working and we have a strong platform for growth. I am committed to building on that. Before John takes you through the third quarter numbers, I'd like to make a few comments. We made several announcements last week. First, Pam Kaur will take over as Group Chief Financial Officer with effect from first of January. Pam is an exceptional leader, who joined HSBC in 2013 as Group Head of Audit, and is currently our Group Chief Risk and Compliance Officer. With almost 40 years' experience in the financial sector, she brings a global perspective to the strategic challenges and opportunities we face today. I look forward to partnering with her for the next stage of the bank's growth and development. I would also like to thank John for his outstanding support during the interim period. Second, we announced a reorganization to simplify and streamline the group. We are currently organized around three businesses in five regions. From the first of January, we will operate through four businesses: Hong Kong and the UK, serving personal banking and commercial banking customers in our two home markets, corporate institutional banking, and international wealth and premier banking. We will also streamline our geographic governance structures, reducing them from five regions to two, further enhancing our ability to serve our customers' needs throughout our global network. Our current Group Executive Committee of 18 members will be replaced by a new Group Operating Committee with 12 members. The analysis we've done so far demonstrates that the reorganization will result in net cost savings with a relatively short payback period on any upfront costs. We will share these details with you at our full year results in February as part of a wider business update. Third, turning to the external environment, I welcome the clarity provided by the UK government on its prudential rules. The PRA's second near final policy statement and rules on the implementation of Basel 3.1 bring an end to years of uncertainty, and will help the banking sector to support growth in the UK. Similarly, I am encouraged by the recent policy measures in mainland China and in Hong Kong. I am confident that the monetary stimulus announced last month, and potential further fiscal and other measures, will help to stabilize key sectors and strengthen mainland China's economy. Meanwhile, Hong Kong's easing of macro-prudential constraints is proportionate and timely, and we expect these measures to have a positive impact on the Hong Kong economy. With that, John will take you through the Q3 numbers. Joe? Thanks, Georges. In summary, we had another good quarter. Profit before tax of $8.5 billion was up $0.9 billion, or 11% on the third quarter of last year on a constant currency basis. This brings our annualized return on tangible equity for the first nine months of the year to 19.3%, or 16.7% excluding notable items. Revenue of $17 billion was up $1.1 billion on last year's third quarter, and up $0.3 billion on the second quarter this year, underlying the good momentum within the business. We've announced today a further $4.8 billion of dollars of distributions, consisting of a third interim dividend of $0.10 per share and a new share buyback of up to $3 billion. We intend to complete this buyback during the four-month period before our full year results announcement in February. Last week, we also completed the share buyback announcement at the half year results in July. We've now repurchased 9% of our share count since the start of last year. As you can see on the next slide, strategic transactions, principally the disposal of Canada in the first quarter, were a small impact on the year-on-year revenue and profit growth. Excluding this impact of these transactions, profit before tax, excluding notable items, was up 13% on the third quarter of last year. Revenue of $17 billion was up $1.1 billion on the third quarter of last year, driven by a $1.6 billion increase in fee and other income. This included a $0.7 billion increase in wholesale transaction banking and wealth. The remaining $1 billion increase primarily reflected strong performance in equities and global debt markets, with global banking and markets, and adverse items in the third quarter of last year that did not repeat, including $0.3 billion of treasury disposal losses and other notable items. Banking NII of $10.6 billion was down $0.3 billion on the second quarter on a reported FX basis, primarily due to a loss arising from the early redemption of legacy securities. Excluding this, the banking NII run rate was stable on the previous quarter. Our 2024 banking NII guidance is unchanged at around $43 billion. Our guidance includes the impact of the $0.3 billion early redemption loss taken this quarter. It also assumes a $1 billion contribution from Argentina this year, which is what we reported in 2023. Argentina has contributed $1.2 billion to Banking NII in the year to date, but the volatility created by hyperinflation accounting makes that number very difficult to forecast from quarter to quarter. Accordingly, I would encourage you to think of our guidance as being around $42 billion, excluding Argentina. Turning to fee and other income. Wholesale transaction banking was up 7% on last year's third quarter. The key driver was global foreign exchange, which grew 12%, benefiting from an increased client activity. Higher volumes also contributed to growth in both global trade solutions and global payment solutions. Wealth was up 32% on the third quarter last year. It was our third consecutive quarter of double-digit growth in wealth, as our continued investments in this business and the importance as Hong Kong as a global wealth hub have enabled us to capitalize on a favorable operating environment. There was double-digit growth in all wealth products, but life insurance was the biggest driver. About half of the growth in life insurance was from the non-repetition of a charge we took in Q3 last year. Excluding that, life insurance still grew well into double digits, mainly because a higher CSM balance drove an increase in CSM release. The CSM balance is a store of value. All else remaining equal, growth in the balance means growth in future earnings, and our CSM balance has continued to grow. In the first three quarters of this year, we've generated more than $2 billion of new business CSM. This has driven our CSM balance to $13.2 billion, a 22% increase since last year's third quarter, creating a foundation for future revenue growth. Hong Kong continued to benefit from inflows of international customers. There were 243,000 new-to-bank customers in the third quarter, versus an average of just over 170,000 per quarter in the first half. Net new invested assets were $26 billion in the quarter, $11 billion of which were in Asia. On credit, you'll recall that our second quarter had a low ECL charge due to recoveries and other items. The third quarter ECL charge was $1 billion, or 40 basis points of average loans. The wholesale ECL charge was $0.6 billion, driven by $0.4 billion in Hong Kong, of which $0.1 billion related to Hong Kong commercial real estate, while the personal charge was $0.4 billion. This brings our annualized ECL charge to 28 basis points of average loans for the year to date, which is broadly in line with our 30-40 basis points guidance for the full year. Next, on costs. Costs were up 6% in the first nine months of the year on a target basis, which was 1% lower than for the first half. As we explained in the previous quarter, the phasing of performance-related pay and the additional levies from the end of last year will give us a tailwind heading into the fourth quarter. We're on track to meet our target of around 5% cost growth for twenty twenty-four on a target basis and remain committed to cost discipline. On lending and deposits, loan balances were stable in the third quarter. Deposits were up 1%, driven by a $16 billion increase in Hong Kong WPB. This reflected short-term flows between invested assets and deposits, and I'd caution you against annualizing that number. Term deposits were 39% of total Hong Kong deposits, unchanged since the second quarter. Next, our CT1 ratio was 15.2%, up 20 basis points on the second quarter, as strong organic capital generation was partly offset by distributions. CT1 grew $3.1 billion during the quarter on a constant currency basis. This growth included $2.9 billion of other movements, mainly gains in the market value of securities classified as held to collect and sell, which are fair valued through other comprehensive income. RWAs grew by $14 billion on a constant currency basis, mainly due to broader balance sheet growth. Finally, I'd like to point out a number of upcoming events which will help you with your modeling. First, we expect the buyback we announced today to have an impact of around 0.4 percentage points on our CT1 ratio in the fourth quarter. It remains our intention to return excess capital to shareholders through a rolling series of share buybacks. Secondly, we expect to complete the sale of HSBC Argentina in the fourth quarter. As a reminder, around $5.1 billion of historical foreign exchange translation and other reserve losses will be recycled to the income statement on completion. This has already been recognized in capital, and there will be no incremental impact on CT1, TNAV, or distributions. These losses will also be excluded from our dividend calculation. We expect the completion of the sale to reduce RWAs by around $8 billion, equivalent to around 0.1 percentage points of CT1. Third, we intend to begin to actively market our $8 billion legacy French home loan portfolio during the fourth quarter. We expect to reclassify this portfolio as held to collect and sell in the first quarter next year, leading to a recognition of an estimated $1 billion pre-tax loss, equivalent to around 0.1 percentage points of CT1. Finally, the PRA recently published near final rules on Basel 3.1. These are incrementally better than we previously expected. We continue to expect them to have an immaterial impact on our CT1 ratio upon implementation. To conclude, our guidance remains unchanged, namely, a mid-teens return on tangible equity, excluding notable items for 2024 and 2025. Banking NII of around $43 billion in 2024. ECLs for the full year within our normal medium-term planning range of thirty to forty basis points. Cost growth are around 5% for 2024 on a target basis, and mid-single-digit loan growth over the medium term. With that, Louise, can we hand over to Q&A? Thank you, John. If you would like to ask a question today, please use the Raise Hand function in Zoom. Please also ensure your camera is turned on. If you're invited to ask a question, please accept the prompt to unmute your line. If you find your question has been answered, you may remove yourself from the queue by lowering your hand in Zoom. Our first question today comes from Andrew Coombs at Citigroup. Please accept the prompt to unmute your line. Good morning, and good afternoon, those in Hong Kong. Two questions, please. One, firstly, just on the reorg and strategy, a very, very simple question: Given the new structure, where does that leave Mexico? So any thoughts on Mexico would be appreciated. And secondly, on the financials themselves, on that non-NII strength, where fees and other income are up 32% year- on- year, and you've highlighted you've now had three consecutive quarters of double-digit growth. Previously, if I go back to your Investor Day in 2023, you talked about high single-digit growth for Asian wealth specifically. You're clearly running well ahead of that and consistently running well ahead of that. So, to what extent do you think we can extrapolate that double-digit growth into future quarters in next year? Thank you. Thank you, Andrew. I'm going to take your first question about Mexico, and John will address the second one. So we have, Andrew, we have a good market position in Mexico. We have a good performance in Mexico. Our wholesale business in Mexico is in a particular strength in our global network of connectivity. It's very strongly connected with our North American business. It's equally very strongly connected with our Asia Pacific business, and therefore is a key strategic cornerstone for our customers. Our retail business in Mexico will form part of the new business segment of International Wealth and Personal Banking. As you know, all our personal banking businesses outside the Hong Kong and U.K., our two home markets, will be part of the international wealth and personal banking and premier banking business, which will be focused on growing the affluent segment in the market and creating a strategic differentiation for us in the market, where we operate in the personal banking space outside home markets. John will take the second question. Andrew, as you know, we've been investing in our wealth capabilities for some time. Wealth was up 32% year- on- year in third quarter, and 20% year- on- year for the nine months. That growth was particularly driven in Asia, where we see a favorable operating environment, but we are seeing broad-based growth across the main segments. That's supported by strong customer growth, and growth in net new invested assets. So we have guided previously to high single-digit growth. I think it's fair that we may well outperform that in the short term. Thank you, Andrew. Thank you. Our next question comes from Aman Rakkar at Barclays. Please accept the prompt to unmute your line. Good morning, and good afternoon. Thanks very much for the presentation and the questions. Yeah, I had a question, one on restructuring and one on net interest income, please. Just trying to scope the degree of ambition that you might have around restructuring. It looks like, you know, efforts to restructure the business are focused on delivering net cost saves. You're clearly doing very well on revenues at the moment, particularly the fee businesses are presumably a source of near-term upside to market expectations. But I think, you know, the outlook is volatile. A lot of these things are outside of your area of control. You know, what, what is the scale of the ambition around what you'd be looking to achieve on things like costs and indeed RWAs as you, as you try and kinda future-proof the medium-term return on tangible equity outlook? And then I had a second question on net interest income. So I think I'm taking the kind of banking NII guide at face value and trying to nix out Argentina, and I think it's implying a kind of annualized run rate of around $41.5 billion at the fourth quarter, as a jumping off point into 2025. Maybe a bit of a low-value question, but interested if you were able to, at this stage, just to comment on banking net interest income as per consensus in 2025. I think the street's at around $41 billion. So, you know, versus that 41.5, not looking for too much attrition from here. It'd be great to get, you know, if you're not willing to put a number on it, but how you see the moving parts are, out there, please. Thank you very much. Thank you, Aman, for the two questions. Again, I'm going to address your first question on the reorganization, and John can take us through the NII, the elements. So, Aman, the primary reason for the reorganization is to create a simpler, more dynamic, more agile, leaner bank. It's really to allow us to empower our frontline staff, and make it faster to make decisions and ultimately serve our customers better. That's the primary reason. Now, as a result of a simpler, leaner, more efficient bank, there will be cost saves. The costs takeout will be essentially in the form of severance or related costs. It will be affecting senior roles that will be duplicated, or, you know, the reduction of the number of senior roles will drive this. We will be giving you those details about, you know, the figures about the upfront costs, as well as the benefits realization, in the full year, in the full year results in February. What I can say is, number one, the benefits will exceed the upfront costs, and the payback is going to happen in a short timeframe thereafter, and then the second point to share with you is that we remain fully committed to cost discipline. I've been sharing this in my days as Group CFO. I carry on this mission of being fully committed to cost discipline, and this is now embedded in the firm, as you have seen from our Q3 results. For 2024, we remain on track to deliver on our cost target. We are committed to it, and we're confident we will be able to achieve it. John? ... So on banking, and I, thanks for the question, Aman. If I might be forgiven giving you a slightly longer answer to this. So if we start on 2024, we've reiterated our guidance on 2024 of banking NII of around $43 billion, but encourage you to think about that as $42 billion ex-Argentina. In total, we've printed $31.6 billion for the nine months to date, and we think the Q3 run rate of $10.6 billion is a pretty clean run rate for you to think about modeling 2025. We don't provide guidance at this stage on 2025 banking NII guidance, but if you take that clean run rate of the $10.6 billion, which aggregates to about $42 billion, we'll have disposed of Argentina. So therefore, we then think of the building blocks for you to model this along four factors. Firstly, rates. The reduction in rates implied in markets will be clearly a headwind. The cuts during the third quarter, given the timing of them, they had a relatively modest impact on the third quarter's results, but we'd encourage you to use our Banking NII sensitivity against market-implied rates to generate that component. We then have the Structural Hedge. That will provide a tailwind. We've got the reinvestment of maturing positions that will enable us to reinvest them at higher rates. We've signaled that for 2025, we've got 115 billion maturing at an average yield of about 2.9%. So think about those maturing and being replaced at something along the lines of five-year bond rates. We've then got volume growth. While volume growth has been relatively subdued in twenty twenty-four, we do hope that with interest rates coming off and economic activity picking up, that we will see more loan growth. We continue to guide to mid-single digits in the medium to long term. The timing of getting there will be unpredictable. And then lastly, we keep an eye on time deposit migration. That has been relatively stable, particularly in Hong Kong, at 39% over the last couple of quarters. But the impact on that, as rates come off, will be variable. It depends on competitive pressures and customer behavior. So all of those factors is how we have thought about it and modeled it, and included that within our mid-teens ROTE guidance for twenty twenty-five. Thanks, Aman. Thank you, Aman. Thank you. Could I just one follow-up? Thanks very much for that really detailed answer. In relation to the mid-teens ROTE aspiration next year, does that include or exclude any potential kind of upfront costs as part of any restructuring? So, the mid-teens ROTE guidance is excluding notable items. We will come back to you in February with full details of the benefits and costs of the reorganization. Thank you so much. Thank you, Aman. Our next question today comes from James Invine at Redburn. Please accept the prompt to unmute your line. Hi, good morning to you both, or good evening. I've got two, please. The first is on the wealth business. So clearly, you got some really good revenue numbers. I was just wondering if you could kind of explain the slight disconnect with the net new invested asset number in Asia. You know, which certainly was positive, but probably not quite as positive as I might have expected, given how good the revenue line was. And then second, could you just share your thoughts about the outlook for corporate loan growth across Asia? So, and in fact, loan growth more generally across Asia. So I think in the second quarter, we saw both Hong Kong and ex-Hong Kong fall slightly. But I think three months ago, Noel was sounding a bit more positive, at least on Hong Kong. Also, we've had the announcements in China about a month ago. So just where do we go from here on the Asia loan volumes? Thank you, James. I'm going to share some thoughts on your two questions, and I'll ask John to go into more details about both of them. First, our wealth business, as you've seen in this quarter, has exhibited double-digit returns. This is the third quarter in a row with similar type returns. Wealth business, as you know, is generated from four segments, one of which has performed quite well, which is the trading activities of our customers, and that manifests both in the private bank as well as in our invested assets. They have been very strong, and they've been even stronger following the measures we've seen in China. On the outlook for corporate loan growth in Asia, we are, as I shared earlier, very encouraged by the policy measures that have taken place, both in Mainland China as well as in Hong Kong. We see these measures, combined with the outlook on rates coming down, as supportive of future growth, specifically in our Hong Kong book. And outside Hong Kong, the rest of Asia remains resilient. Southeast Asia and South Asia have remained quite strong in terms of loan growth, although, of course, a different size in our books than Hong Kong. John? So just to amplify your comments on wealth. We're seeing good growth in wealth. We see the net new investor assets. We're very pleased with that. In Asia, they've grown by $11 billion in the quarter and $49 billion over the nine months. You will see some movements as we grow our wealth franchise. We also had $16 billion of deposits, which Georges talked about. We'll see also deposits increase. That they will ultimately feed into the wealth share of wallets that we've got. So continue to be encouraged. On corporate loan growth, nothing more to add than Georges' comments. Thanks. Thank you, James. Thank you. Our next question today comes from Kunpeng Ma at China Securities. Please accept the prompt to unmute your line. Okay. Good morning, Georges. Good morning, John. This is Kunpeng Ma of China Securities. Thank you for taking my question. I got one question on transaction banking, because we've seen a slight recovery in the transaction banking income in the third quarter, but I think that's maybe driven by the FX volatilities. But going forward, maybe we can see more rate cuts going forward, and we can maybe we're going to see continued FX volatilities going forward. So could you please give me a little bit more color on the future outlook of the transaction banking income? If you could, you know, comment on both NNI and non-NNI, that's going to be quite appreciated. Thank you. Thank you, Kunpeng. I'll ask John to comment on this area where, as you've heard us saying, an area that of strategic differentiation for us, for our wholesale customers, and where we keep investing and do expect continued growth in this space, given our investments and our leadership in this space. John? Yeah. So we've been pleased by the growth in wholesale transaction banking in the quarter, up 7%. As you say, an element of that is client-driven activity around FX and rates volatility. But within that, we continue to invest in global trade solutions and global payments. In global trade solutions, we continue to grow our market share in both Hong Kong and the UK. And so, as that market comes back, there is the opportunity for us to that be a platform for our growth. Similarly, you'll can see us to continue to invest in global payment solutions, and we see a very optimistic path for the payment markets going forward. Thank you. Thank you, Kunpeng. Thank you. Our next question today comes from Amit Goyal at Mediobanca. Please accept the prompt to unmute your line. Hi, thank you. Two questions from me. One, just coming back on the simplification program. Just curious, I guess, in the past, you know, the group hasn't opted to combine commercial banking GBM. So just curious, what's kind of seen as different now, you know, which makes this more feasible and, you know, easier to execute with less, maybe, revenue attrition or other consideration? And then secondly, just on the ECL charges, those were a little bit higher than what I anticipated. It looks like a bit of that's from Hong Kong also and in the UK Ring-Fence Bank. Just curious if there's any kind of additional color you can provide on that and, you know, how you're thinking about the kind of full-year bits in the context of, you know, the guidance into next year. Thank you. Thank you, Amit. Let me address your first question, and John can address the ECL charges question. So the primary reason of this reorganization is to simplify the bank, as we shared. But we've been on a multi-year journey to simplify the activities we do in the bank. We've been exiting activities that were non-strategic. We've been reshaping our portfolio. We've exited markets or activities that, you know... You know, currently, we're on track to complete the sale of our Argentina business and our Armenia business, and announced two additional exits in September, including South Africa, as well as the private bank in Germany. Now, that activity was addressing the what in terms of what we do as a strategy. The reorganization we've announced last week is basically addressing the how we execute our strategy. It's not changing the what, it's changing the how. The reason we could effectively execute the how we change our strategy, as in be simpler, more agile, is because of the work we have done over the past few years in simplifying the what we do. It is the right time now to address how we operate, how we execute our strategy, because we've simplified what we're doing. We've clarified what are core strategic areas for us, where we have competitive strength and where we have leadership and opportunities to grow. So the timing, therefore, is a natural kind of conclusion of the various activities that we have been taking through the transformation over the last five years. I wanna say that outside the UK and Hong Kong, where we're merging all our commercial banking activities with global banking and markets activities to form the corporate and institutional bank, it will comprise our core products, including our balance sheet-related products, credit and lending, and deposits, our transaction banking products, as well as our other products, such as investment banking or markets. And this should give our customers a more seamless way to deal with HSBC across all this product spectrum that we offer them... John? So thanks, Amit. I'll give you a bit more color on the ECL charge. There's a $1 billion charge in third quarter, which is 40 basis points of average loans. That's actually a more normal charge, 'cause Q2 benefited from releases and recoveries. If you then dissect the third quarter charge, there's three things within there. So firstly, the UK, which is a $0.2 billion charge. Again, that benefited from the releases in the second quarter. It's a more normal charge. There's nothing more going on in there. Hong Kong, in total, we incurred a $0.5 billion charge. As you say, that was mainly $0.4 billion charge in wholesale, which included $0.1 billion of Mainland China CRE and $0.1 billion of Hong Kong CRE. The rest of it was across a number of sectors. Again, nothing of particular note. Then, relative to third quarter last year, we did have an increase in our Mexico retail charge, so that went up to $0.2 billion charge. That's actually been relatively normal through the quarters of 2024, but relative to third quarter 2023 is a little higher. We're confident as we see this, that we will be in our 30-40 basis points planning range over the medium term, and certainly there for 2024. Thank you, Amit. Our next question today comes from Gurpreet Singh Sahi from Goldman Sachs. Please accept the prompt to unmute your line. Thank you for taking my question, and congratulations on a good set of numbers. I have two, and mostly follow-ups. First is on wealth, and then we'll move to Hong Kong CRE. On wealth, can I check with the so-called policy rescue in China? Only a month old, and for this reporting quarter, maybe only a week. So have we seen like from August as we transitioned into September, good wealth management income traction better than what we are reporting in the third quarter, and then in October that continued, maybe it even accelerated? So some color there would be helpful. On Hong Kong CRE, specifically, not talking about Hong Kong in general, can we get numbers on the NPL ratio within the overall global CRE book and also the Hong Kong CRE book, as at the half year we were 9% Stage Three loans in both. Thank you very much. Thank you, Gurpreet. Let me just briefly address wealth, and I'll ask John to complement it and address your Hong Kong CRE question, so there are two trends in wealth. There is the underlying trend, which is a continued growth in our wealth business, which has been there quarter after quarter. It's a result of both our increased investment in the space. It's a result of us winning market share, given our brand and franchise. It's also a result of the underlying market growing. You know, as you've seen, Hong Kong is now expected to become the largest private wealth hub in the world by the end of the decade. So that is definitely a trend, and we're privileged with our position in Hong Kong to be able to benefit from it and benefit our customers from it. That is the first component, which is an underlying continued investment and growth trend. You add to that, obviously, the additional activity we've seen following the measures that have been taken in China. This has created additional activity, which has been, you know, as you said, for a week or so in the third quarter. We do see this activity continuing and obviously normalizing, but we do see this, these measures that have been taken to be supportive measures, certainly of the economy at large, but in particular, supportive measures of the financial markets and the revival of some of the financial market sluggishness that we've seen in both Mainland China and Hong Kong over the last few quarters. John? So if I pick up your second point on Hong Kong CRE, it's actually a very similar picture to that we described at the second quarter. So a few customers continue to face cash flow pressures. Some of that is rates resultant, and as rates come off, we would hope that begins to abate some of those cash flow pressures. If you look at the Asia wholesale Stage threes, they were up $1.1 billion in the quarter. Some of that relates to Hong Kong CRE. That also drove a modest amount of additional RWAs. The ECLs on that, we've referred to the fact that there was a $100 million charge on ECLs. That was both across Stage One and Stage Two. The Stage Three ratio is slightly up quarter on quarter. But we continue to see good collateral across that portfolio, and so we don't see this as a material ECL driver going forward. Our focus is really on supporting our customers through this period, and as I say, as pressures we should see start to reduce as rates recede. Yeah, and as we said, Gurpreet, we are confident about the outlook of the Hong Kong economy at large and the Hong Kong commercial real estate sector in particular, partly because of the rates receding, as John was just mentioning, but also, partly due to the policy measures and the countercyclical measures that have been taken, this month to support the sector. We see these as having positive developments for the outlook of the market. Thank you very much, Gurpreet. Our next question today comes from Jeremy Hou at CICC. Please accept the prompt to unmute your line. ... Good morning, Georges. Good morning, John. Good morning. My first question is on the structural hedge. I think, Georges, you mentioned that twenty-five billion is a good run rate for you for how you to build up the structural hedge in the second half. But in Q3, that increased by twenty-seven billion, and maybe most of that comes from FX impact. So, do you still stick to a twenty-five billion run rate, or you would like to accelerate it? And the second question is on... I would like to hear your thoughts on what area HSBC can further make investments, because it feels like over the years, our strategy always emphasized that the bank had to make excellent good cost discipline, and we did it. And we made some investments, but mostly small ones. So if we look forward, do you see any opportunities that may help us to further drive growth and take market share, or do you think it's better to stay cautious as we are still facing some top-line pressures? Thank you. Thank you, Jeremy. Let me address your second question on investments, and then John can address your structural hedge question. So first, as you said, cost discipline, you know, I've taken it from my, you know, my days in my CFO role with me as CEO. It is embedded in the organization, and we will maintain cost discipline. You should expect this to be ingrained in the way we think, you know, in spending wisely and in the right places. In terms of strategy, we've basically, in the reorganization we announced last week, we are basically organizing ourselves alongside our strategic pillars. This creates clarity, and this also creates simplicity in the way we can execute our strategy. We have two home markets where we have scale, a leading market position, and great growth opportunities, and certainly very strong competitive edge. In our corporate and institutional banking business, we have a global connectivity capability and a transaction banking capability that is second to none, that is very leading and providing excellent services to our customers. Our positioning is very cherished and very valued by our customers. And then we have wealth and premier banking, which is really the proposition aimed at the affluent segment for investment needs, in particular, across our network, and in particular, so in Asia and the Middle East. Any opportunity we have to accelerate this strategy, will, be it organic or inorganic, is an opportunity we will go after. These areas all exhibit fantastic growth opportunities. We have a real competitive edge, and we will continuously invest in them, both organically and inorganically, if the opportunities arise. What I should say there is, we do have the capital to support our needs. We have the capital to support, obviously, our dividend distribution, to support organic growth, and to support inorganic opportunities, should we find some that can accelerate our strategy and allow us to gain market share. John? Jeremy, if I pick up your question on structural hedge, as you rightly say, we have increased our structural hedge during the period from $504 billion at the thirtieth of June to $531 billion at the thirtieth of September. But that was mostly FX driven. The duration of that remains 2.8 years. We would continue to expect to increase our structural hedge, but that will depend on market conditions that we have. And I would say that the big increases of our structural hedge are probably behind us, so further increases from here will only have a modest impact on our banking NII sensitivity. Thanks, Jeremy. Thank you, Jeremy. Our next question comes from Katherine Lei at J.P. Morgan. Please accept the prompt to unmute your line. Hi. Thanks, George, and thanks, John. So my questions will be two. The first one I would like to ask about NII. I think the confusing thing here is that I think on the headline NII actually slightly missed expectation. But if we work out the banking NII, there's a moderate beat. And also, we try to calculate what is the banking net interest margin. It seems it's by and large stable, despite that in 3Q, HIBOR actually went down kind of like on average fifty basis points. So may I ask, like, what is driving that stable net interest margin? Would it be from the liabilities management side? Just now, John gave us some color, in terms of like, say, deposit migration, but is that possible to give me some—give us some, like, numbers to work around? Like, what is the CASA ratio in Hong Kong, and how does—how the trend has changed? So this will be my first questions. My second question is that when I look at the RWA migration, I saw on the numerator that in the migration side, and there is a favourable addition to CET1 capital, due to movement in reserves. Can we get a bit of color on that as well? Will we be seeing some kind of movement, like similar type of movement in the coming quarters? Actually, I have one slight additional question on the loss that we were talking about, the legacy securities. Can you give us a bit of color on this one? And understand that management put this into notable items, so supposedly to be one-off, but is it really one-off in nature? Will we have other securities, perpetual bonds, that we would like to redeem in the future? Like, say, for example, do we have another 10% type of perpetual bond currently in our book that we may be looking to redeem it when opportunities arise? Thank you. ... Thank you, Catherine. I'm going to let John answer the three questions, but allow me one comment on the legacy securities. We have said that we will look at our legacy securities, continuously, but we will take action that are accretive or neutral. We will not take action on legacy securities that are detrimental to our investors and our shareholders. In this case, we've taken an action on a legacy security that has a more than 10% coupon that could be naturally and easily replaced with, much lower rates, and therefore, there is a positive impact on the net present value basis of the actions we've taken. And, and these actions, we will always look at where, where there is value in it. John? Yeah. So, thanks, Catherine. Three questions there. So if I start on your net interest margin, we give some detail on the net interest margin on page 17 of the slide deck. But effectively, the net interest margin has moved from 162 to 146. There are three things driving that: one, the loss on the early redemption of legacy securities, as you've mentioned. Two, some Argentina volatility. And then the remaining is on. We've allocated more funding to the trading book, and as you know, that will be a drag on net interest income, but also an equal and opposite benefit on non-net interest income. So our preferred measure and the way that we think about it is through the banking NII lens. There, you'll see that, our clean, run rate, ex-Argentina and ex the notables, has been relatively stable period on period, reflecting the fact that the Q3 rate cuts had, given their timing, had a modest impact on Q3. If I... You'd also asked about deposit migration. We've again got some detail in that on, slide 17, but it-- that has remained relatively stable at 39% for the Hong Kong deposits. If I move on to your, CT1 question, and then particularly the, change in other adjustments for CT1 capital, that is around the fair value movements of our, securities that are classified as fair value through OCI. So we've generated a gain on those, which has given us also a capital benefit on that. I think on legacy securities, Georges has covered most of the questions on that, but we're not signaling anything at this stage around further legacy securities redemptions. Thank you, Katherine. Thank you, Katherine. Our final question today comes from Edward Firth at KBW. Please accept the prompt to unmute your line. Yeah, morning, everybody, and thanks for taking the questions. I just have two questions. One was just a clarification. Just to be clear, the 1.1 billion increase in Stage 3 loans in Hong Kong, is that all CRE? That's just to be clear on that. That was the first question. The second one is, we've obviously got a U.S. election coming up in the next couple of weeks, and I just wondered if you could give us some thoughts from your perspective, in terms of the possible sort of risks and opportunities that you see, that could come out of that, I guess, with the two realistic options. I guess just related to that, there was a lot of press comment that your reorganization was driven by splitting up the Asian and I guess the UK or developed markets businesses. Is that actually right, or is that just sort of idle speculation from journalists? Great. Thanks so much. Okay. Thank you, Ed. Let me take your second and third questions, and John can address the Stage 3 question. So look, we're, you know, this is a matter for the U.S. electorate to choose their president. I'm not going to speculate or comment. We will see the outcomes on the fifth of November. But what is important for us is that we serve our customers. We have been serving our customers through various, well, through an evolving set of rules and regulations, on the, you know, on the global scale. We serve them for their needs, especially for their cross-border needs, where we're unique at being able to do so. We obviously comply with all rules and regulations. We will make sure that our customers are able to comply with all rules and regulations, and so far, that their financial needs are concerned, and any new rules and regulations which may come with any new administration are things that we will obviously comply with and support our customers to comply with. What I can say, though, is it remains a distinctive skill that we have in supporting our customers' cross-border needs. This is one of our unique areas of competitive edge, and this remains unchanged, and our customer needs remain broad, broad-based, and global, and we will continue supporting them on that mission. And with regards the reorganization, this is categorically not either an intent or a preparation, as has been speculated by some, splitting of the Asia business or et cetera. Absolutely not. This is a simplification of the bank, where we today govern ourself through five regions, and we're bringing this regional setup down to two. That is part of the simplification. It is also meant to help us speed up the build-out of what is a very promising corridor between the Middle East and Asia. We're seeing material growth in this corridor over the last few years. Our customers across both Middle East and Asia are looking for opportunities of trade and investments between them, and we have a unique position to be able to help our customers across this corridor. That simplification should also help speed up the build of that corridor... And I remind you, in our, you know, Western geographies now, we're essentially a wholesale bank. We have sold our retail banking activities in France. We've sold the mass retail activities in the U.S. We've sold the bank in Canada. We've sold the bank in Greece. We are in the process of selling the bank in Argentina, and with that, we'll be left with what is essentially a corporate and institutional banking business that also bring some simplification aspects to the way we govern ourself in this region. These are the reasons why we did the simplification of the organization we announced last week. John? Great. On your CRE question, Ed, so of the $1.1 billion increase in Asia wholesale Stage 3s, most of that was Hong Kong CRE. The picture is very similar to how we described it at the second quarter. We could see more migrations into Stage 3 until interest rates begin to ease the cash flow pressures in those businesses. But given the collateral levels that we have against that portfolio, we don't see that as a major driver of ECL risk going forward. We're focused on supporting our customers through this transition period. Thanks, Ed. Great. Thanks so much. Thank you very much, Ed. That ends today's Q&A, so I will now hand back to Georges for closing remarks. Thank you. Thank you, Louise, and thank you everyone for your questions, today. To recap, we delivered another good quarter, which shows that our strategy is working. We have reconfirmed all of our guidance, including mid-teens return on tangible equity for 2024 and for 2025, excluding notable items, and I'm committed to building on this, which our organization will enable us to do by simplifying and streamlining the group. We will share more details at our full year results in February as part of a wider business update. Neil and the team are available to answer any questions, and I look forward to speaking with you again very soon. Please enjoy the rest of the day, wherever you are, and thank you again. Thank you, ladies and gentlemen, for joining today's webinar. You may now disconnect your line.