This document provides an overview of Grupo Financiero HSBC in Mexico and Panama. It discusses HSBC's competitive advantages in the Mexican market, including its large branch network, young workforce, and international management experience. The document reviews HSBC's strong financial results for 2005, with profit before tax up 17%. It also compares HSBC's performance to peer banks in Mexico. The document outlines HSBC's strategies for continued growth, such as increasing cross-sales among its payroll customer base and expanding into the non-prime consumer segment. It discusses HSBC's recent investment in Financiera Independencia to gain access to the sub-prime personal loan market.

1. 1
Grupo Financiero
HSBC
in Mexico and Panama
------------------
Sandy Flockhart
Group General Manager &
CEO Grupo Financiero HSBC, S.A. de C.V.

2. 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.

3. 3
The Mexican market.
HSBC’s competitive advantage.
2005 financial results & achievements.
Peer bank comparisons.
Investment in Financiera Independencia.
Managing for Growth in Mexico.
Content

4. 4
Vision
To become MexicoTo become Mexico´´s leadings leading
financial services companyfinancial services company
in the eyes of ourin the eyes of our
customers within the next 3customers within the next 3
years.years.

5. 5
Mexican market – upside for banking
• Improving macroeconomic fundamentals: steady GDP growth and low inflation
• Fiscal accounts strengthened by high oil prices and record levels of foreign
remittances.
• Economy strengthened by the pickup in domestic demand and foreign exports.
• Low credit penetration vs. other countries.
Consumer
lending as %
of GDP*
Housing credit
as % of GDP*
Users of financial
services as % of total
population*
Amount of wage
remittances (USD
million)*
Mexico 1.9% 0.9% 25
93
95
N.A.
USA 17.7% 61.4%
16,613
N.A.
N.A.UK N.A. 91%
Brazil 5.23% 1.37% 1,711
*Sources: Bloomberg, Institute of International Finance, Bank of England, Banco Central do Brasil, Banco de México; for 2004.

6. 6
Grupo Financiero HSBC in Mexico
• Large and Growing National Franchise
– 6.5 Million Customers (plus 11 million non customers that use our branch network)
– 1,400 Branches (20% market share*)
– 5,200 ATMs (24% market share*)
– 22,000 well-motivated FTE
• Market positioning
– Mass-market retail bank but moving up-market following rebranding
– Now a player in corporate banking
• Multi-Line Financial Services Group
– Commercial Bank (All traditional services, Private Banking in Mexico & Panama)
– Insurance Company
– Retirement Services (Afore)
– Bonding Company
– Trust Services
– Stock Brokerage
– Asset Management
* Source: CNBV, Press Releases and Peer Bank Financial Statements

7. 7
Grupo Financiero HSBC in Panama
• 65,000 retail customers, mostly up-market clientele (3,000 Premier
customers)
• 1,000 CMB and CIB corporate clients
• 19 branches
• 73 ATMs
• 646 employees
• Strengths in residential mortgages, credit cards, and commercial lending
• Acquisition in AUG05 of Financomer, a finance company in Panama with a
focus on lending to civil service and pensioners, via direct deduction at source
of borrowing. This added 12 points of sale to HSBC Panama's branches, and
will aid HSBC in becoming a more mass market, retail bank in Panama.

8. 8
Competitive Strengths
• Mexico’s longest bank opening hours (8 a.m. to 7 p.m.) & weekends
• Lowest cost of funds in the market (150 bps below competitor avg.)
• Young & sales-focused workforce
– Average employee age of 25
– 50% of branch compensation is incentive-based
• Premier – soon Premier International
• HSBC Global network & NAFTA region strength
• International management team (blend of HSBC & Bital)
• Product & Process innovations
– Tu Cuenta, integrated pkg. suite for retail customer, selling at rate of 2,300 per day (90% are new
customers).
– Estímulo, only packaged product for small businesses
– Sale of personal loans, credit cards, & insurance products via ATM network
– Cross-border mortgage product
– 20% market share of international remittances (driven by the strong performance of La Efectiva,
electronic remittances cards, and joint initiatives with HSBC Finance Corp.)

9. 9
Experienced, internationalExperienced, international
management teammanagement team
Credit Card system implementation,Credit Card system implementation,
from HSBC Finance Corp. (formerlyfrom HSBC Finance Corp. (formerly
Household)Household)
– Cost savings
– Flexibility
– Ability to white label
Credit scoring methodologies,Credit scoring methodologies,
models, and knowmodels, and know--how, from HSBChow, from HSBC
Finance Corp.Finance Corp.
PremierPremier
Leveraging synergies with the
HSBC Group
IMPORTSIMPORTS EXPORTSEXPORTS
Customer RelationshipCustomer Relationship
Management (CRM) knowManagement (CRM) know--how, tohow, to
AmericasAmericas
ATMs business & strategy, toATMs business & strategy, to
Group sites worldwideGroup sites worldwide
– Direct sales channel
– Location selection techniques
Variable pay compensationVariable pay compensation
techniques, to Group sitestechniques, to Group sites
worldwideworldwide

10. 10
Grupo Financiero HSBC
2005 Financial Results - Highlights
•• For the year:For the year:
– Profit before tax up 17% to USD 951m
– Cost efficiency ratio improved to 57.7% from 58.7% in 2004
– Impaired Loans / Total Loans ratio improved from 3.1% at DEC04 to
2.6% at DEC05.
– Capital ratio (local basis) increased from 13.7% at DEC04 to 14.3%
at DEC05.
• Significant investment has supported these results and provides a
robust platform for future growth. Over USD 400m has been
invested in the last 3 years in property (including new head office),
technology, and security.
Figures in USD millions
Under IFRS

11. 11
PFS 2005 Achievements
• The numbers of credit cards in circulation in Mexico grew by 80 per cent to
1.1 million, driving a 85 per cent increase in fee income.
• HSBC Mexico received the Gartner Award for CRM excellence, competing
amongst 150 global companies. The evaluation criteria included vision,
strategy, client experience, organisational collaboration, processes, information,
technology and measurement systems. In 2005, CRM accounted for 71 and 64
per cent of HSBC Mexico’s personal loan and credit card sales, respectively.
• In Mexico, Premier has enrolled over 100,000 customers, with an average
cross-sales ratio of 3.6.
• The number of HSBC’s Internet Banking customers in Mexico grew by 50% to
over 260,000 during the year.
• The HSBC D-2 fund is now the largest mutual fund for individual investors in
Mexico, having assets of over MXN 20 bn (USD 1.9 bn) at year-end, and
representing growth of over 40% from prior year.

12. 12
CMB 2005 Achievements
EstimuloEstimulo, the only integrated banking product for small businesses in Mexico,
was well received by the market, with USD 155m in lending, over 4,600 accounts
now open and average cross-sales ratio of 4.6.
CMBCMB won the mandate to structure and disburse a USD100m, 5 year loan, to
HOMEX, the market leading housing developer, for the acquisition of the BETA
corporation.
Trade ServicesTrade Services increased its market share from 4.5% to 8% during the year,
generating revenue growth of 44% over prior year. (Source: CNBV)
HSBCHSBC maintained its position as market leader within the Agricultural lending
sector with a 20.3% share. (Source: CNBV)
An Agricultural InsuranceAgricultural Insurance product was developed and launched in 1Q05, the
first of its kind in Mexico with USD1.7m of premium income.
Mutual FundMutual Fund investments by CMB customers increased by 43%.

13. 13
CIBM 2005 Achievements
Global MarketsGlobal Markets generated an increase in net interest income from higher
customer and trading volumes, and successful strategic positioning in 1H05’s
rising short-term interest rate environment. In the second half of the year, trading
income benefited from the proper positioning of the accrual book when interest
rates declined.
Higher profits in the money market trading and derivatives portfoliomoney market trading and derivatives portfolio were
achieved due to the implementation of a new Group-standard derivatives system
in 1Q05.
The newly-formed Group Investment Banking FinancingGroup Investment Banking Financing (GIBF(GIBF) team is off to a
good start, with the joint placement of a Petroleos Mexicanos (PEMEX) debt
offering for MXN 10 bn, several mandates to underwrite bridge loan and
mortgage securitizations, and the sole lead arranger for a MXN 2 bn debt offering
for the Interamerican Development Bank.
The CIB loan portfolioCIB loan portfolio (excluding IPAB) more than doubled from prior year. CIB
refinanced a MXN 24 bn loan with the IPAB, protecting ourselves against further
prepayments, in addition to granting another MXN 5 bn.

14. 14
Peer Bank
Comparisons
Source: CNBV, Press Releases and Peer Bank Financial Statements.
All figures in MXN millions, under MEXGAAP and represent banking subsidiaries only
(HSBC México, S.A.).

15. 15
4,1993,600
4,615*
6,738
14,653
9,356
5,411
Bancomer Banamex Santander Banorte Scotiabank HSBC
* Adjusted due to non-recurrent events: Banorte’s 2Q05 results were affected by non-current events for
MXN 796 m .
Net Income 2005
Figures in MXN Millions
under MEXGAAP
At December 2005
Only banking subsidiaries

16. 16
27.6%28.2%
27.1%18.5%21.2%
14.7%
31.7%
Bancomer Banamex Santander Banorte Scotiabank HSBC
Net Income / Avg. Total Capital
(ROE)
• HSBC HAS AMONG THE HIGHEST ROE IN THE MEXICAN MARKET.
* Adjusted due to non-recurrent events: Banorte’s 2Q05 results were affected by non-current events for
MXN 796 m .
Figures in MXN Millions
under MEXGAAP
At December 2005
Only banking subsidiaries

17. 17
15.4% 16.0%
6.6%9.3%
24.6%
28.2%
Bancomer Banamex Santander Banorte Scotiabank HSBC
16.5%
19.1%
10.0%
16.5%
10.5%
-5.1%
Bancomer Banamex Santander Banorte Scotiabank HSBC
Market share
FEB06
Growth FEB06 vs. FEB05
Source: CNBV, Press Releases and Financial Statements.
Peso Customer Deposits
Up from
14.5%
in February
2005
Figures in MXN Millions
under MEXGAAP
At December 2005
Only banking subsidiaries

18. 18
5.4%
4.1%3.8%
3.2%
6.3%
4.0%
Bancomer Banamex Santander Banorte Scotiabank HSBC
Cost of Funds
• HSBC CONTINUES TO INCREASE ITS DEPOSITS, WHILE MANTAINING
ITS FUNDING COST ADVANTAGE.
Cost of Peso Customer Deposits at FEB06
Figures in MXN Millions
under MEXGAAP
At December 2005
Only banking subsidiaries

19. 19
61.0%
45.1%
55.5%57.5%
73.7%
78.7%
Bancomer Banamex Santander Scotia Banorte HSBC
Growth in Credit Card Balances
vs. prior year
Growth in Peso Mortgage Balances
vs. prior year
65.3%
42.6%
27.4%
45.8%
221.2%
68.7%
Bancomer Banamex Santander Banorte Scotiabank HSBC
Source: CNBV, Press Releases and Financial Statements.
Strong Growth in Mortgages
& Credit Cards
Includes transfer
of business from
Sofol Hip. Nac.
Figures in MXN Millions
under MEXGAAP
At December 2005
Only banking subsidiaries

20. 20
Investment in Financiera Independencia
• In March 2006, HSBC acquired 19.99% of Financiera
Independencia, one of Mexico’s leading consumer finance
companies, for US$ 65 million.
• Founded in 1993, Financiera Independencia has 500,000
customers and 189 branches in 69 cities throughout Mexico.
• Access to salaried sub-prime and informal personal loan
market, targeting micro-entrepreneurs.
• A key market which HSBC has identified for its high growth
potential.
– Large market – over half Mexico’s economically active population in this
segment.
– Little bank competition (segment attended by pawn shops, loan sharks,
and store credits, all averaging APRs of 80-200% annually).

21. 21
Strategy for Growth
• Mexico is a “key” market. We have 20-25% of the banking
infrastructure and a respected brand. We will continue to grow
into our infrastructure, thereby significantly growing our market
share.
• Increase cross sales / share of wallet among our extensive
payroll customer base, which currently amounts to 2.3 million
customers.
• Much of our PFS business is non-prime. Continued growth into
non-prime and the informal economy/SMEs is a key focus and
presents great opportunities going forward.
• Youth Market. There are currently 45m Mexicans less than 19
years old. Over the next 10 years this means 10m new potential
bank customers.

22. 22
Thank you