🔝+919953056974 🔝young Delhi Escort service Pusa Road
HSBC Our Vision - Asia Pacific
1. Our Vision: Asia-Pacific
Sandy Flockhart, Chief Executive Officer
The Hongkong and Shanghai Banking Corporation Limited November 2007
2. Forward-looking statements
This presentation and subsequent discussion may contain certain
forward-looking statements with respect to the financial condition, results
of operations and business of the Group. These forward-looking statements
represent the Group’s expectations or beliefs concerning future events and
involve known and unknown risks and uncertainty that could cause actual
results, performance or events to differ materially from those expressed or
implied in such statements. Additional detailed information concerning
important factors that could cause actual results to differ materially is
available in our Annual Report.
All financial figures in this presentation for “Hong Kong” include Hang Seng Bank and references to
“Asia-Pacific” include Hong Kong (and Hang Seng Bank) and rest of Asia-Pacific but exclude the
Middle East and dilution gains from Chinese associates. Financial information for HSBC Group uses
International Financial Reporting Standards.
2
3. Agenda
The world’s largest and most profitable
international emerging markets bank
• Our strategic vision
• Joining up our businesses
• Asia-Pacific – engine for growth
Closing remarks
3
5. Our outlook – the world
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Ten years ago… Today… Ten years’ time… Share of
global GDP
1. Emerging markets growing 35%
4 1% G7
faster than rich countries 50% 50%
Non-G7
59%
65%
Source: HSBC estimates
Level 1990 = 100
700
2. World trade growing faster World trade
500
Global GDP
than GDP 300
100
Source: HSBC estimates
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
People aged 60 and over (%)
World
30
3. Longevity increasing More developed
20
Less developed
virtually everywhere 10
Europe
0
1980 2000 2025 Source: HSBC estimates
5
6. Our outlook – emerging markets
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
8.6%
7.5%
GDP growth 5.1%
3.5% 2.9% 2.3%
(2006 – 2020F)
Western
China India Asia Latin USA
Source: HSBC estimates
Europe
America
7.8%
6.9%
Trade growth 5.4% 5.1% 4.6%
(2000 – 2020F)
Latin Western USA
Intra-Asia Asia Source: HSBC estimates
America Europe
9.9%
7.5%
Household consumption 5.2%
3.5% 2.9% 2.9%
(2006 – 2020F)
Western
Latin
China India Asia USA
Source: HSBC estimates
Europe
America
6
7. HSBC
Our strategic vision
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Global universal bank with
leading emerging markets presence
Leveraging our unique international network through
customer groups, global platforms and culture
Benefiting from global diversification, strong capital
base and continued prudent stance on risks
7
8. Linking developing and developed markets
Our strategic vision
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Profit before tax split, average over last four half years1 Rebalancing over last two years1
32% 42%
21% 58%
europe
north america
1H05
39% 47%
53%
asia-pacific &
8% the middle east Average over last four half years
latin america
50% 50%
1H07
Asia, Middle East and Latin America
(1) Excluding dilution gains North America and Europe
8
9. Asia-Pacific
1H07
Joining up our geographies
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
33% to US$4.992bn
pbt up
• Pre-eminent international bank in Asia
Asia-Pacific PBT by business
• Hong Kong: gateway to China
4%
• China: two-prong strategy with leading position
32% 42%
amongst international institutions
• Combination of organic and inorganic investments
23%
• Focussed market expansion in key businesses using
PFS CMB CIBM PB
direct channels
(1) Others at -1%
9
10. Emerging markets
Asia-Pacific (1H07)
Our outlook
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
PBT (US$m) % change
1H07 1H07 vs 1H06
Asia-Pacific 4,992 33%
Hong Kong SAR 3,330 25%
Mainland China (ex dilution gains) 473 69%
India 299 39%
Singapore 267 44%
Malaysia 145 13%
Indonesia 58 115%
South Korea 58 21%
Taiwan 43 200%
Other 319 24%
10
11. Personal Financial Services
1H07
Joining up our businesses
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
45% to US$2.12bn (Asia-Pacific)
pbt up
• Preferred provider with top class ethical sales and
Group PFS PBT by region
service culture
• Direct channels
3%
• Consumer finance in emerging markets
31%
45%
• Focus on delivery of core products
• Global Premier
13%
8%
• Insurance
Asia-Pacific Latin America
Europe North America
Middle East
11
12. Commercial Banking
1H07
Joining up our businesses
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
26% to US$1.14bn (Asia-Pacific)
pbt up
• To be the leading international business bank
Group CMB PBT by region
• Strengthening international connectivity
6%
14%
• Expanding customer base with emphasis on SME
33%
growth in second-tier countries
• Global Links cross-referral system increased by 130%1
10%
over 1H06 to US$3.1bn
37%
• Direct channel usage increased helped by enhanced
Asia-Pacific Latin America
Europe North America
Business Internet Banking platform expansion
Middle East
(1) Includes Middle East
12
13. Corporate, Investment Banking and Markets
1H07
Joining up our businesses
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
42% to US$1.58bn (Asia-Pacific)
pbt up
• Emerging markets-led and financing-focussed
Group CIBM PBT by region
wholesale bank
• Benefit from geographic network and strengthened
5%
11%
product capabilities
38%
• Global Markets success broadly based
• Global Banking strength in financing and payments and
40%
6% cash management
• Group Investment Businesses continued expansion in
Asia-Pacific Latin America
Europe North America
Middle East emerging markets
13
14. Private Banking
1H07
Joining up our businesses
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
27% to US$216m (Asia-Pacific)
pbt up
• Outstanding international service
Group PB PBT by region
• Client assets increased by 22%1 to US$62 billion
8%
28%
• Net new money in 1H07 at US$5 billion1
• Expanding onshore in Japan, India and other markets;
1%
growing in Singapore
63%
Asia-Pacific Latin America
Europe North America
(1) Covers Hong Kong only
14
15. Insurance (Group)
1H07
Joining up our businesses
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
US$1.6bn1 or 11% to group pbt
contributed
• A world class bancassurer and top 10 player
pbt by region, 1H07
• Developing our income stream through distribution
Europe Asia
30% 33%
• Market leader in Hong Kong
Latin America
• Expanded regional footprint
North America
16%
21%
• New life insurance branch in Taiwan
pbt by source of business, 1H07
Other Incl
• Joint ventures in China and India
Ping An
17%
Manufacturing
•10% investment in Bao Viet in Vietnam (Sep07)
50%
Distribution
33%
(1) Group figures. The results of Insurance are reported within customer groups, primarily PFS
15
16. Global Operations
Joining up our businesses
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Technology Global Resourcing Global Platforms
Build once, deploy many Lift and shift to re-engineering Linking up
• One global network, self- • 10 centres of excellence in 5 • Credit cards: 116m cards
managed countries
• HSBCnet: 33,000 clients
• 230,000 miles of fibre optic • 29,000 employees
• Global transaction banking:
cable
• Wide range of processes: from PCM, sub-custody, trade
• 80 global Group platforms payments to collections to
• HSBC Direct: launched in the
analytics
• 4 global data centre pairs, two USA, Korea, Taiwan and
regional Canada
• 42% of development in low- • CRM: Global Premier, Global
cost countries Links in CMB, and
ClientVision in CIBM
16
17. Asia – pre-eminent international bank
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Opportunities Strategy
• Growing mass affluence • Branch network expansion
• Intra-regional trade and • Internet and alternative channels across all
investment flows businesses
• Strategic partners to broaden reach and gain
Challenges distribution
• Regulatory constraints on • Delivering products to Asia and distributing
foreign banks emerging markets funds globally
• Focus on niche wealth segments and other
emerging consumer segments (i.e. Islamic banking,
consumer finance, non-resident Indians and
immigrant communities)
17
18. Hong Kong – springboard into the Pearl River Delta
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
To grow the leadership position and be the leading cross-border bank
• Personal Financial Services – leverage success in multi-channel
distribution to focus on wealth management, investment and
insurance; re-launch Premier
• Commercial Banking – grow value from the existing base by
servicing regional and global needs
• Corporate, Investment Banking and Markets – deliver high margin
and cross-border solutions in Global Markets and Global Banking
18
19. China – leading international bank
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Organic business Strategic investments
Bank of Communications
HSBC Bank (China) Co. Ltd.
•
• 15 branches, 37 sub-branches 19% ownership (as at 28Oct07)
• 2,600+ outlets
• Local incorporation, full RMB services
• Co-branded credit cards (>2 million)
• Drive expansion of the branch network
• Qualified Domestic Institutional Investor
in key economic zones: Pearl River
scheme, trade and payments
Delta, Yangtze River Delta and Bohai
• Knowledge sharing
Rim
• Joint business cooperation
• Focus on Premier in PFS
• Leverage our global network in CMB Ping An Insurance
and CIBM
• 16.8% ownership
• 200,000 agents
19
20. India – a large national franchise
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
• Investing in Personal Financial Services
– 47 branches, 26 cities
– 2.8 million customers
– 2.5 million credit cards
– Non-resident Indian services in key markets abroad
• Launched consumer finance, HSBC Pragati
– 29 branches, 24 cities
• Corporate, Investment Banking and Markets and Commercial Banking driving
profits
– Facilitates 5% of Indian trade, 30,000 small business customers
– Leader in foreign exchange, growing share of debt capital markets and project finance
• Strategic partnership
– Insurance joint venture with Canara Bank and Oriental Bank of Commerce
20
21. Malaysia – extend national franchise
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
• Over 1 million cards in force – third-largest Cards ‘000
issuer Cards in force
1,100
doubled in 3 years
• Add 6 Islamic Banking branches in 2008 to 1,000
the current 40 branches 900
• Develop alternative channels 800
700
• Build wealth management capabilities
600
• 30,000 SME customers 500
• Leader in foreign exchange, interest rate 400
2003 2004 2005 2006
derivatives and debt capital markets
• Expand Amanah Finance
• Strategic joint venture HSBC Takaful
− Cross-sell insurance to existing customers
21
22. Indonesia – growing the distribution network
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
• Add 24 branches and 50 consumer finance outlets to reach 168 locations next year
• Add 79 automated teller machines to reach 129 ATM outlets next year
Personal Financial Services:
• Premier
• Credit cards – 674,000 cards in force (No. 2 position)
• Consumer finance – Pinjaman HSBC, the fastest growing in the country
Commercial Banking and Corporate, Investment Banking and Markets:
• Expand our SME business
• Build on our leadership position in Payments and Cash Management
• Grow our market share among foreign banks in trade finance
• Consolidate our 42% market share in custody
• Cross-sell insurance to all customer groups
• Grow Amanah Finance
22
23. Vietnam – poised for growth
Asia-Pacific – engine for growth
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Well positioned for market growth
• Concentrate on cards and personal loans
• Mid and upper SME commercial banking
• Corporate, international and sophisticated local corporates
• Pioneer and participate in development of Vietnam capital market
Strategic partnerships
• Techcombank: 5th largest bank, agreement for 15% stake with intention to reach 20%
• Bao Viet: largest insurer, 10% stake with pre-emptive rights to reach 25%
• Offer distribution and scope for collaboration in businesses such as cards,
bancassurance and asset management
23
25. Asia-Pacific – changes in the past decade
Investing and reaping
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
From 314 branches1 and 35,0002 staff today in 1997…
From PBT US$2.557bn3 and assets US$190.4bn4 in 1997…
(1-2) Asia-Pacific excluding Middle East
(3-4) Uses GAAP and pre-IFRS accounting standards
25
26. Asia-Pacific – the future, now
Investing and reaping
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
…to 339 branches1 and 62,4002 staff today
China Korea Japan Taiwan
19% Bank of Communications Direct Banking Retail Bank Launch 100% Chailease Credit Services
16.78% Ping An 82.19% fund company AmTek Direct Banking
8% Bank of Shanghai
49% Fund JV HSBC Jintrust Philippines
24.9% Beijing HSBC Brokers 100% HSBC Savings Bank
50% Insurance JV National Trust
Vietnam
15% TechomBank US$105m
10% Bao Viet
India
Malaysia
26% Insurance JV with Canara Bank and
100% HSBC Savings Bank
Oriental Bank of Commerce
(pending approval)
4.98% UTI Bank Australia / New Zealand
Singapore Indonesia
HSBC Pragati – consumer finance Westpac sub-custody US$113m
Keppel Insurance Pinjaman HSBC – consumer finance
…to PBT US$6.674bn3 and assets US$502bn4 today
(1) Asia-Pacific ex Middle East
(2) Asia-Pacific ex Middle East, including Group Service Centers
(3-4) Uses IFRS accounting standards
26
27. Where we have come from
The benefits of global diversification
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
US$2.2bn provision for
US$ Mortgage services
1.50 1.40
1.36
Argentinean 1.18
Asian
HSBC’s Positioning Crisis
Crisis 0.99
1.00
0.81
0.80 0.76 0.73
0.69 0.66 0.66
0.63
0.61 0.60
0.54 0.53
0.49 0.48
0.44
0.41
0.50
0.35 0.34
0.31 0.31
0.28
0.22
0.16
0.15 0.14
0.12
0.10
0.08
0.00
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Earnings Per Share Dividends Per Share
(1) UK gaap to 2003, IFRS basis from 2004
(2) Dividends per share in respect of each year
27
28. HSBC
Our strategic vision
Outlook Strategic Thinking Asia Platform Our Businesses Key Countries Positioning
Global universal bank with
leading emerging markets presence
Leveraging our unique international network through
customer groups, global platforms and culture
Benefiting from global diversification, strong capital
base and continued prudent stance on risks
28