HSBC Commercial Banking - Transforming Opportunity

HSBC Holdings plc
‘Commercial Banking – transforming opportunity’
Presentation to Investors and Analysts
Transcript
D A T E :
Friday, 28 September 2007
P R E S E N T E R S
Sandy Flockhart
Chief Executive Officer, The Hongkong and Shanghai Banking Corporation
Global Head of Commercial Banking
Margaret Leung
Head of Commercial Banking, Asia-Pacific including the Middle East
Chris P Davies
Head of Commercial Banking, North America
Jose Manuel Dominguez
Head of Commercial Banking, Latin America
Alan Keir
Head of Commercial Banking, Europe
C O R P O R A T E P A R T I C I P A N T S
Nick Collier
Head of Strategic Finance, HSBC Holdings plc
Danielle Neben
Manager Investor Relations, HSBC Holdings plc
C O N F E R E N C E P A R T I C I P A N T S
Anthony Broadbent
Sanford C. Bernstein & Co. – Analyst
Arturo de Frias
Dresdner Kleinwort Wasserstein – Analyst
Raul Sinha
Lehman Brothers – Analyst

Derek Chambers
Standard & Poor's – Analyst
Stephen Andrews
UBS – Analyst
Ian Smillie
ABN Amro – Analyst
Robert Sage
Bear Stearns – Analyst
Ian Gordon
Exane BNP Paribas - Analyst
F O R W A R D - L O O K I N G S T A T E M E N T S
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 uncertainties 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.
P R E S E N T A T I O N
Nick Collier
[Title Slide]
Welcome to our investor presentation on Commercial Banking. Welcome to those joining us in the
Meridian room at HSBC headquarters and to all of those joining us by webcast in the evening in Asia and
in the early morning in North America.
With us is Sandy Flockhart, Chief Executive Officer of the Hongkong and Shanghai Banking Corporation
and also Global Head of Commercial Banking. We also have our Regional Commercial Banking
executives who have come here today to talk to you why they are so excited about the opportunities that
we see in Commercial Banking. You will recall that, in our 2007 results, the Commercial Banking business
continued to perform strongly with 20% profits growth. Today, we will go into more detail about the
opportunities that we see ahead in Commercial Banking and the strategies to fully capture the benefits we
see arising in this business.
Just one housekeeping point -- as always, will you please make sure your mobiles and BlackBerries are
switched off? Otherwise, they will interfere with the system.
[Slide: Forward looking statements]
Of course, before we start, I would like to draw your attention to the normal forward-looking statements in
this presentation. That's all for me, and over to Sandy. Thank you.
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Sandy Flockhart
[Slide: Commercial Banking – transforming opportunity]
Thanks, Nick. Well, good afternoon on a pretty dismal London day, actually, and thank you for joining us
today.
As some of you may be aware, in HSBC, I wear two hats. One is CEO of the Hongkong and Shanghai
Banking Corporation Limited. The other is Global Head of CMB. For this presentation, I will put on the
latter.
[Slide 1.01: Agenda]
It's a great pleasure to introduce my management team, in the table in front of me that runs Commercial
Banking or CMB as we shall refer to it in today's presentation. In many ways, as I introduce them, we will
also be following trade flows around the world which offer HSBC fantastic opportunities, given both our
geographic reach and our core competencies in trade finance, payments, and cash management.
Margaret Leung -- stand up, Margaret -- (LAUGHTER) has responsibility for Asia-Pacific and the Middle
East and will be highlighting how we're optimizing the business derived from the growing levels of intra-
regional trade in that region.
Chris Davies covers North America, where trade is increasingly being driven by NAFTA. That brings us
neatly to Jose Manuel Dominguez, who runs our regional business in Latin America. He will explain how
we are integrating the Banistmo business and connecting Mexico, Central America, Argentina, Brazil and
the other countries in Latin America up and driving our CMB business forward there.
Alain Kier is responsible for Europe – ‘Good Afternoon’ - and the UK, and we will be highlighting how
we're building out of our presence in central and eastern Europe.
[Slide 1.02: Strategy and objectives]
Before we look at regional performance and initiatives, I want to outline our key strategies and highlight
our recent successes. Our goals are focused around two central strategies, firstly to be the leading
international business bank, and secondly, be the best bank for small businesses. When you leverage
these strategies in the context of CMB's emerging markets footprint, it is clear that CMB and HSBC
provides the Group with significant upside potential and differentiation. Many of our customers are looking
beyond local borders, and our extensive network enables us to provide a bridge between customers from
mature economies and those in developing markets.
The value of our transaction business is approximately, for example, US$2 billion. That was for the first
half of '07 and represents 30% of our total revenues. We are able to build on our traditional strengths in
trade finance and transaction banking and evolve offerings as our customers’ needs change. That
network allows us to support a range of customers from micro enterprises to large corporates with
products, services and channels to match each segment. We're working towards a deeper remunerative
connection with customers. We have two-way cross-referrals with our personal banking, private banking,
and corporate investment and banking markets businesses.
[Slide 1.03: The world as we see it evolving]
Global trends are conditioning the way we formulate Group strategy. The growth in emerging markets is
striking. They are now growing faster than mature economies ten years ago with emerging markets
representing about 30% of world GDP. Today, they are over 40% and on current trends, which we believe
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will continue, they will represent 50% or more within ten years. This has obvious implications for the way
we develop our franchise.
The second trend is related to the first one. As globalization maintains its momentum, you see not only
reasonable levels of world economic growth, but the world trade is growing faster than world economic
growth. So for a bank with the leading position in Commercial Banking, this presents us with material
opportunities. For example, world merchandise exports from Asia are growing at 20% per annum and
intra-Asian trade faster still. From this data, you can see why the leading international business strategy
was appropriate for us and why Commercial Banking is focused on capturing growth in emerging
markets.
[Slide 1.04: Core strength in Commercial Banking]
Here are our core strengths. Our footprint is expansive and second to none, serving 2.7 million
businesses through nearly 7000 relationship managers across 63 countries and territories. Commercial
Banking in the first half of 2007 posted US$3.4 billion profit before tax, up 20% from the first half of 2006
and compromises one-quarter of the HSBC Group's total profits. These figures reflect the inclusion of
Grupo Banistmo's operations in Latin America.
Our record results have been driven by growth in small-business banking in emerging markets,
efficiencies derived from direct channels, and our multi-channel strategy. Our web-based, cross-border
referrals system, Global Links, generated 37% more referrals in the first half of 2007 versus the same
period last year. We have achieved these results with a cost efficiency ratio of 44.2%. More importantly,
we have achieved double-digit revenue growth for the fifth year running.
[Slide 1.05: CMB financial performance]
Looking more closely at recent financial performance, these are the highlights. Profits are up 20% as a
result of increased fee and interest income. Costs are growing, but this reflects investment and expansion
initiatives in India, mainland China, and the Middle East, key emerging markets that we believe will drive
future income growth. Margaret Leung will explain later what some of these investments are.
Despite a 22% jump in operating expenses, we saw cost efficiency improve to 44.2%. Loans and
advances are up 22%, while impairments rose to US$431 million. The percentage growth looks dramatic
but expressed as a percentage of loans or advances, the rise is modest, from 34 basis points to 46 basis
points on an annualized basis.
You would expect me to comment more on loan impairments and the life of the current financial markets.
For Commercial Banking, we continue to see a relatively benign environment and as yet witnessed no
contagion from subprime mortgages to business banking. We are, though, alert to any signs of a
slowdown.
Geographically, we have almost exactly a 50-50 split in profit between emerging markets and mature
economies, which is in line with the Group strategy. The growth in profit before taxes of course stronger in
the emerging markets, 27% after the half-year against 10% growth in mature economies.
[Slide 1.06: Developing countries – growth engine]
In developing countries, we see profit growth of 30% or more in many countries, even as we are heavily
investing in them. Geographically, we're well placed to capture emerging market growth with an unrivaled
Asia Pacific network and a growing footprint in Latin America. In particular, we are strategically positioned
in China, being the largest foreign bank in the mainland market, with both a local franchise and
partnerships with key players in the mainland market. We continue to join up business opportunities
through investment, cash management and trade flows between mainland China, Hong Kong, Taiwan
and Vietnam.
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There is significant growth in India, Malaysia and Latin America. Economies for SMEs are taking the lead
and where businesses are becoming increasingly international in their aspirations. It is one thing to be at
the right place at the right time. It is another to be the right company. Our growth will be fueled most
significantly by unique competitive advantages, our unparalleled distribution combined with our unique
focus on SMEs as a specialized segment, our traditional expertise in trade and transaction banking, as
well as our ability to join up across products, IT platforms and customer groups. These unique
advantages will make us stand out in the emerging markets space. You'll hear how our strategy is
succeeding in these regions from Margaret Leung and Jose Manuel Dominguez shortly.
[Slide 1.07: Developed countries – international connectivity and segmentation]
Across Europe and North America, where economic growth is less than in emerging markets, we have
never the less produced creditable results. A very important element I would highlight here is the growing
demand for capital markets solutions, one that we are able to serve effectively as we join up our
Commercial Banking distribution with our corporate investment banking and markets product capabilities.
For example, in Germany, we're able to grow Group revenues by connecting HSBC's emerging market
capabilities to the needs of corporate there. While revenues are not booked in Germany, the business we
capture from our subsidiaries referred to us in emerging market economies is propelling international
business growth. You'll hear more about these opportunities from Alain Kier and Chris Davies later.
[Slide 1.08: CMB segmentation strategy]
Our customer spectrum ranges from microp business to corporates, with SMEs and mid-cap customers
making up a significant portion of our base. We have a segmentation strategy in place that matches
product development, sales and relationship management, as well as distribution channel resources to
each of these segments. We see the potential to derive maximum volume from the customer relationship
when we can, firstly, cross-sell products in the segment and secondly, move the customer up the
segmentation chain as their business grows and migrates to the next stage of the business lifecycle.
Thirdly, we can connect these customers to other customer groups who are able to support their
investment banking or personal -- or private banking requirements. For example, traditionally, we've been
successful in serving the upper end of the pyramid. But where we want to refocus, in the short to medium-
term, is on the small-business segment, which we believe will drive our business into the next phase of
our strategy.
[Slide 1.09: To be the leading international business bank]
The first of our strategic goals is summarized in the phrase "to be the leading international business
bank." As we have already said, HSBC Commercial Banking has a unique footprint across 63 countries
and territories. We are connecting our capabilities together in several ways, through building out our
international banking centers dedicated to opening new accounts for customers, existing and new who
need cross-border services, covering 23 countries at the half-year and on target to cover over 50 by the
year-end; through the Global Links referrals system through which 3,100 business referrals were made in
the first half of '07 from relationship managers in one country to their colleagues in other countries, with a
transaction value of US$3.2 billion; through corporate international teams serving corporate clients in the
USA, UK, Hong Kong, China, France and Germany; through joining up to serve both ends of customers
transactions using traditional strengths in trade finance, payments and cash management and connecting
more sophisticated customers to Corporate, Investment Banking and Markets.
[Slide 1.10: To be the best bank for small businesses in target markets]
We aim to be the best bank for small businesses in target markets. SMEs are fueling the growth of many
countries today, especially in the emerging markets in China, where SMEs account for 78% of total
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nonagricultural employment. In India, they account for 95% of manufacturers and about 50% of exports.
SMEs are at the heart of an economy's innovation and evolution. We recognize that today's SMEs could
be the big corporations of the future. We are already partners with many SMEs, in fact some 2.5 million
around the world. HSBC probably banks more SMEs internationally than any other bank. We understand
their needs. SMEs tend to have limited capital but the majority don’t borrow. We can lend to those who
need finance and take deposits from the majority. In most major sites, we receive significantly more
deposits from SMEs than we lend, which helps our overall self-funding strategy.
There is material opportunity to grow our customer base in this segment and to transfer Best Practices.
We are refining our customer segmentation across the Group to target the customers who will drive our
growth. We will transfer our credit knowledge from mature economies to emerging markets, where
appropriate, as it becomes possible to introduce credit-scoring models in emerging markets. We see
potential in expanding our Internet banking offerings as we see customer take-up and transaction
volumes rising online.
We will roll out direct banking, which we launched in the UK recently under the brand "Business Direct" to
selected markets globally. We will focus on core products and deliver them to the right customers at the
right time, through the right channels using straight-through processing.
SMEs are at the core of our Commercial Banking strategy. We're focused on supporting this segment,
understanding their needs and aspirations and capitalizing on the growth opportunities presented by their
success.
[Slide 1.11: New channels]
The Internet is changing the way in which our customers are doing business, and we are well-placed to
provide them with appropriate solutions. We already have 1.3 million commercial customers registered for
internet banking. Active customers registering for internet banking increased by 28% in the first half of
2007. Online transaction volumes increased by nearly 60% to 107 million over the same period. We
recently upgraded our business Internet banking platform and are rolling out a second-generation
platform which we call B2G, or businesses second generation. What does this mean? When a customer
logs on to their screen, messaging will be tailored according to their behavior patterns, thus targeting
specific products and services, a very powerful tool. The B2G platform is more customer friendly and
provides a differentiating tariff structure.
We are meeting customer needs with new tools across both Internet and mobile phone technology. In the
UK, business customers can now get mini-statements and event-driven text messages to their mobile
phones. In Turkey, HSBC is the first to launch for SMEs the use of secure signatures by mobile phones to
verify payment instructions. In Brazil, SME customers can now make additional loan applications and
drawdowns via ATMs.
Not forgetting our international Corporate Banking platform, HSBCnet, with over 30,000 CMB customers
around the world and channeling 2 million transactions per month. This platform allows management of
overseas accounts, online trade services and an FX trading platform. Overall, HSBCnet reaches
customers in 56 countries and users in 164 countries.
[Slide 1.12: Cross-border cooperation in Emerging Markets]
This is an example of cross-border cooperation in emerging markets. A global relationship manager from
the Czech Republic in Prague attended the global relationship manager program in the UK in March
where she met a group relationship manager from Shanghai. Later, one of Prague's customers sought a
US$8 million loan to support the working capital requirements of a subsidiary based in Anhui province in
China. At that time, HSBC could not lend in Renminbi, and neither did we have a presence in Anhui
province. But the group relationship manager was able to reach out; she contacted her relationship
manager counterpart in Shanghai, who then liaised with a partner Bank of Communications, who was
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able to support the transaction. This deal generated more than $100,000 in year-one revenue but it also
highlighted the benefit of HSBC's global approach. It supported our relationship in the Czech Republic,
where we compete with Citibank and we have now been awarded other deals. Overall, we have improved
the return on this relationship from US$600,000 in 2005 to an estimated US$1 million this year. A further
loan for $12 million financing for a plant expansion has recently been agreed by HSBC Shanghai. Which
other bank could have done this deal, I wonder?
[Slide 1.13: CMB – joined up within HSBC]
CMB has always been a significant generator of leads for other parts of the Group. We connect with
colleagues in the retail bank and with our Premier customer group, and with the global businesses of
Private Banking and Corporate, Investment Banking and Markets. We also rely on and get great support
from the global products groups, such as transaction banking, Amanah Finance, and insurance. Amanah
Finance is our Shariah-compliant financing unit, for those of you who may or may not know that.
These are two-way relationships. For example, we are focused on cross-referrals to and from Private
Banking, and these produced a 21% growth in Private Banking sign-ups in the first half of 2007 over
2006, and a growing flow of new business opportunities for Commercial Banking from their existing
relationships. Our connectivity forces a symbiotic, synergistic relationship across customer groups,
allowing us to deepen and expand customer relationships.
[Slide 1.14: CMB – corporate sustainability]
Corporate sustainability is embedded in our Commercial Banking business. We have a number of
programs that create shareholder value, as well as position the Bank to be a partner of choice for
companies who are increasingly putting social responsibility at the top of their agenda.
In Hong Kong, we've been running a program called Living Business since 2004. This recognizes socially
responsible SMEs and provides professional advice about sustainable business practices and the sharing
of Best Practice among SMEs as corporate responsibility becomes a competitive advantage for large and
small companies alike.
Since 2004, 261 SMEs have participated in the awards scheme. Over 2,200 SMEs have attended 23
seminars and 26 SMEs have received awards of cash prizes totaling close to HKD1 million. The program
is now running in Singapore, Sri Lanka and Korea. There are plans to take it to other regions.
We are incorporating corporate responsibility into our product suite. Between India and London, we
helped an MME with a structured trade finance deal to finance the Company's carbon credit trading. In
Hong Kong, we launched the first eco- friendly financing product, the Green Equipment financing scheme,
offering customers interest rebates in a loan repayment moratorium when they take out a loan to
purchase equipment that complies with environmental protection regulations.
[Slide 1.15: CMB – our edge]
HSBC's competitive edge in Commercial Banking explains why we are an important part of the Group's
business globally and in particular in emerging markets like Asia and Latin America, contributing over
24% to total Group pretax profits at the midyear. Being at the center of the world's most dynamic
economic investment and trade flows, it matters only if you have unique capability to harness these
opportunities, and HSBC has that advantage and appetite. Our regional network enables us to capture
cross-border opportunities and our global footprint connects our customers with the rest of world.
Moreover, we are one of the few banks, if not the only one, that has placed SMEs as a segment of its
own, not as part of any other business but as a unique segment that requires dedicated attention and
focus. HSBC also has the unique potential to connect customers across our various capabilities, and as
we deepen our relationships, we derive maximum value from our customers.
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Thank you for your attention. I will be happy to take your questions at the end of the presentations. At this
moment, I will hand-over to Margaret and she will stay on a few minutes after she has presented to
answer some of your questions, and then onto the next presenter. Thank you.
P R E S E N T A T I O N – A S I A
Margaret Leung
Thank you, Sandy. Good afternoon.
[Slide: Asia]
[Slide 2.01: CMB financial performance – Asia]
The following few slides will be on our operations in China, - in Asia. In the first half of 2007, we've
increased our profit before tax by 25% over the first half of 2006. We are confident that we will be able to
do even better before the end of the year by continuing to build on the momentum that we have created in
the past few years.
In the first half, Asia-Pacific region contributed around 40% of the global Commercial Banking profit
before tax. We accounted for 28% of global Commercial Banking customer advances totaling about
US$51 billion and 36% of global Commercial Banking's deposits at US$73 billion. Hence, we are very
much a significant and growing part of Commercial Banking and we are self-funded.
There have been several growth drivers behind the business. The net interest income increased 22%.
This was driven by an increase in both the advances and deposits. Deposits in Hong Kong, for example,
have increased by 23%. Other countries have also done well, primarily on account of acquisition of new
accounts with particular success in opening accounts for companies from mainland China, deposit
campaigns in Singapore, for example and Taiwan; they have been opening new branches in India and
Jakarta.
Net fee income increased by 18% in the region. We undertook a number of initiatives to support the small
and medium businesses in order to grow that business. However, due to several one-off bad debts in
Thailand, Malaysia and Indonesia, provisions have increased $36 million over the first half of 2006,
impairing the top line. But as you can see, as a percentage of our revenue, that remains very modest.
Wherever we take a prudent and conservative approach to our credit and lending, we will also adopt a
long-term view and invest in our business, people and technology, to ensure a significant increase in
revenues and maintain our market leadership. We remain committed to expanding our presence in the
growth economy. The prospective acquisition of Korea Exchange Bank, for example, reflects that
strategy.
[Slide 2.02: CMB financial performance – Asia 1H05 to 1H07]
Commercial Banking in Hong Kong set new records in the first half of 2007, following three years of very
strong growth. The net operating income before provisions increased by 17% to US$1 billion, and profit
before tax increased by 29% to US$760 million. With revenues increasing significantly with tight control
over cost, the cost efficiency ratio had improved in Hong Kong from 27% to 24.5%.
In the rest of Asia-Pacific, excluding Hong Kong, despite investments in the business expansion,
resources and infrastructure, the cost efficiency ratio continued to improve and reduced from 41% to
39%. We have a strong presence in growth markets of India, mainland China, and the UAE.
Going forward, we aim to stay ahead of competition, focusing on being the best SME bank and leading
international business in the region, of which I shall be elaborating in the following slides.
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[Slide 2.03 – CMB in Asia]
Commercial Banking in Asia-Pacific region covers 30 countries, ranging from New Zealand in the East
and to South Africa in the West. We are investing into this region as it has the fastest growth economies
in the world.
CMB has a diverse customer base, ranging from micro enterprises to global corporates, and a balanced
profit mix to meet the need to clients in the Asia-Pacific region.
There is a growing SME segment with increasing cross-border trade flows. Significant investment is
underway in South Korea, India and Vietnam, along with branch expansion in a number of countries,
including China and Malaysia.
[Slide 2.04: Diversification – beyond Hong Kong]
Commercial Banking has diversified its geographic footprint over the past few years, as there has been a
focus to capture the growth in the rest of Asia-Pacific. This is shown in the pie chart which shows that the
profit before tax in the rest of Asia-Pacific, excluding Hong Kong, has grown to 44% from 33% while, at
the same time, profit before tax for the entire Asia-Pacific, including Hong Kong, has grown by 69% when
compared to the first half of 2004. The weight will continue to shift in this part of the world, given the
enormous potential posted by many of the booming economies in Asia and the Middle East. Overall,
Asia-Pacific in Commercial Banking had diversified its geographic source of income while at the same
time growing the total profits.
[Slide 2.05: ROAP geographic distribution – a balanced picture]
As demonstrated in the pie chart, Commercial Banking has a wide distribution of profit before tax among
the Asian countries. In the UAE, growing balances and alignment of countries within the Gulf Country
Council are factors contributing to profits. Singapore has implemented market campaigns to grow dposit
balance, which is improved revenue. In China, branch expansion has contributed to customer acquisitions
and profit growth. In India, we have a lot of initiatives to expand into the provincial cities to capture clients
in the SME space.
[Slide 2.06: BPT growth rates exceed GDP]
The strong growth in results is not merely macroeconomics at network. Commercial Banking's growth had
actually exceeded the GDP growth in the individual countries in the region. In India, profit before tax has
grown 15 times faster than GDP in a country, and in the other countries -- China, 5.4; Singapore, 6.8;
UAE, 5.7; and even in Hong Kong, it's 5.5 times of GDP.
Commercial Banking is also investing in the front-line sales staff in order to capture the growing MME and
SME businesses in these countries.
[Slide 2.07: Strategic focus – leading international business]
Our focus is our international business and SME business. On the international business front, we
continue to roll out and build on international banking centers and placement of RMs, relationship
managers, in foreign countries to leverage cross-border transactions.
International banking centers have been set up across the priority sites, where trade specialists are
managing the cross-border account openings for Commercial Banking customers worldwide. This
initiative is expected to reduce the amount of account opening paperwork by up to 40%.
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Relationship managers have been placed in countries to leverage the bilateral trade relationships
between countries. Examples are: we are putting Vietnamese relationship managers in Taiwan and vice
versa; Korean relationship managers in China and vice versa; and more of such relationship manager
placements will be set up over time throughout the region.
To expand cross-border banking capability, we drive the cross-border referrals through Global Links that
Sandy had mentioned. It had grown 75% in the Asia-Pacific region. We connect intra-regional business
opportunities with the growth's unique global footprint. We are connecting intra-regional business
opportunities by supporting customers' needs on a regional basis. For example, there are regional
relationship managers set up in the greater China region and the Middle East to look after the customers.
In 2007, South Africa had been added under our umbrella, putting Asia-Pacific in a position to expand its
growing trade flows between South Africa, the Middle East, China and India. We are also taking
advantage of the growing investment flows between South Asia and Mauritius and developing their
aligning initiatives between the two countries.
[Slide 2.08: Strategic focus – to be the best small business bank]
HSBC Hong Kong won the Hong Kong Chamber of small and medium business [SME] Best Partner
Award in 2007, and this is winning the same award two years in a row. We're emphasizing that are the
best SME bank in Hong Kong. This also demonstrates the (inaudible) partnership with SMEs commitment
that we have.
The results of the A.C. Nielsen survey conducted in July 2007 were very encouraging. HSBC was
considered of the top two banks by clients as compared to other foreign banks. We have been able to
achieve this through investments in channels, products and services.
On channels, we have built SME business banking centers throughout the Middle East, in Qatar,
Pakistan, Jordan, and the UAE. I will just cover a bit about what the Middle East is contributing to us.
Across the Middle Eastern region, SMEs form a vital part of the economy. There are about 1 million of
such SMEs in the region. By way of comparison, 90% of all registered companies are classified as SMEs
in Saudi Arabia, and they contribute 30% of Dubai's GDP. The region's key trade partners in Asia are
China, India, Japan, Korea and Singapore.
HSBC follows the flow of capital, both into and out of the Middle East, but operates our best-in-class trade
services to SMEs and joining them up with suppliers and customers in Asia, where our goods are.
We're broadening our customer reach and investing in delivering channels at Internet Banking. The
physical footprint is being expanded to provincial cities in India and cities outside of Jakarta in Indonesia.
Dedicated business banking units, Commercial Banking centers, and transaction processing centers are
also in operation. With B2G, that Sandy has mentioned, is now is available in most countries. These
channels are being repositioned as a sales platform.
Call centers are being repositioned as a proactive sales and service center on products and services, we
strive to enhance customer experience and satisfaction by developing and introducing targeted products
and services. This includes the re-launch of Business Vantage, our core SME deposit proposition.
HSBC Business Card is a solution for small businesses to manage the company expenses. In Hong
Kong, just a year ago, business cards are being written for other countries like Malaysia.
Business Cards is also the leading card in terms of retail sales for the orient, ahead of Visa business
cards in Hong Kong since January 2007. We invest in new trade services like SME TradeSmart, a
bundling of both conventional as well as Islamic trade products and services, and we are introducing that
in Malaysia this year.
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Packaged lending products and judgmental score cards are being introduced or enhanced in countries
like India, Indonesia and Singapore. India and Singapore have introduced dedicated receivable finance
offerings, and in Taiwan, we have acquired an integrated Chinese credit services this year. This is now
renamed HSBC Factors. Not only does this allow us to strengthen our two-way factoring export business
in Taiwan, but it also provides us a solid base in the greater China region. And on the insurance front,
SME Flexi Commercial Insurance has been launched in Hong Kong recently.
[Slide 2.09: Strategic focus – investment for growth]
Mindful of the strong potential in the region, we will continue to leverage on our existing sound based and
in particular SME with trade needs. There are three regions that we pay particular attention in growing
organically. These are China, India and the Middle East. We expand our reach in China and India to
explore the opportunities posed by the rapid growth in these countries. A research study that we have
done in the Greater Shanghai and the Pearl River delta area indicates that 85% of close to 1 million
SMEs in the country are privately-owned enterprises, or POEs, within which only 1% of the SME -- of the
POEs, are using foreign banks. While in India, there are about 600,000 SME customers within our current
footprint and out of that, we only have about 34,000 customers, i.e. a mere 6% market share. It just
shows there's still plenty of room for us to increase our market share in these two very important
countries.
With India and China being the top trading partners of the UAE, HSBC's trade services know-how and the
group’s expertise and presence in China, India and the Middle East, HSBC is perfectly well positioned to
leverage from these countries' trade flows, allowing us to further integrate and create multiple growth
engines.
Investments will be on products and channels. We will expand the range of Shariahh-compliant products
and services, including Islamic letters of credit, collections, and open account trades. We will be
expanding the product suite in the UAE, for example, from predominantly simple current accounts, time
deposits and LC facilities to a full product suite covering equipment finance, export facilities and factoring.
Islamic financial services is a US$250 billion industry today, and it is growing at about 15% annually.
Globally, there are about 200 Islamic financial institutions covering retail, commercial and investment
banking. Islamic finance is an ethical and equitable mode of finance said to derive its principal from the
Shariah-based, Shariah law based on the Koran.
The most distinctive element of Islamic finance is the prohibition of interest. Other elements include
emphasis on the desirability of profits and the prohibition of gambling. Islamic finance is not only catered
for the Muslims, but it is also increasingly proving attractive to non-Muslim companies that seek this kind
of financing.
In Malaysia, we are applying for the Islamic subsidiary banking license. Malaysia is in the process of
obtaining this license for the Amanah business. Under this license, we will be allowed open our own
network of branches. This will help us to expand Commercial Banking's reach and tap into new market
areas.
The Amanah business itself is another growth area for Commercial Banking, especially in terms of non-
conventional banking products.
Dubai and Malaysia actually are centers of excellence for Islamic banking. These two centers will identify
and pioneer new propositions and initiatives for existing and new markets, acting as catalysts of change
while ensuring alignment with the overall vision and strategy.
We aim at expanding receivable finance solutions for our business trading for businesses that are now
trading on open account terms. We are developing a strategic plan on the expansion of receivable
finance products for the entire region.
11

On channels, we are exploring direct banking for the micro-SME businesses in selected markets.
Channels and account offerings are not only considered as two distinct, but as one, and are being offered
as part of a bundled product for our customers. With the business direct success in the UK, we are now
evaluating the feasibility of its implementation in India, Singapore and Australia during the course of 2008.
We shall enhance the reach through call centers and commercial transaction centers. In many of the
Asia-Pacific countries, we will be enhancing our market presence by opening new branches and other
contact points such as the commercial transaction centers, call centers and drop boxes. We shall
continue to migrate customers onto the e-channels. Global Finance Awards recently recognized HSBC as
the most successful and innovative provider of online banking services to both corporate and institutional
customers and to consumers. We have contended strongly, particularly in Asia-Pacific and the Middle
East, in China and Malaysia. The B2G has now won the Best Corporate Institution Award in Asia and
Malaysia.
Building on our recent success, we will continue to get clients to use the web-based offerings.
That covers my presentation on the Asia part. I would like now to invite questions on the Asia-Pacific
business.
Q U E S T I O N A N D A N S W E R - A S I A
Q1: Sustainability on PBT growth exceeding GDP
Anthony Broadbent
Anthony Broadbent from Sanford Bernstein. I'm very intrigued by your Slide 6 which shows the
relationship between GDP growth and PBT growth for the different countries. I guess what I'd love to be
able to get a view on is the sustainability of that. So I don't know if you can talk us through a little what is
driving that. I mean, is it huge gains in market share, which you did allude to? Is it massive growth of the
SME sector? Is it some [inaudible] of the P&L that's just leading you to these extraordinary PBT growth
ratios? If you could just help us understand a little bit more, I would be very grateful.
Margaret Leung
It's, I must say, it's a combination of all of those. In particular, you can see that the growth that exceeds
the GDP the most is really in India. In India in 2006, we have been able to double the profits. In the first
half of 2007, we have been able to more than double the income that we generated in the first half of
2006. That is mainly by focusing on the Commercial Banking business, by having more Commercial
Banking centers, putting more resources in place, and capturing customers.
I think customer acquisition had been a very strong force in getting business through the door. We have
been generating both the liability income as well as the asset income. We are looking at not just the
middle market but also at the SME business. We also have a micro business in India as well.
In the other countries, if you look at Hong Kong, even Hong Kong is about 5.5 times the GDP in Hong
Kong. That is very much building on the economic growth in China. Hong Kong has been used not only
as a channel for trade and capital investment into China, but in the past 24 months or 18 months or so,
we see that it's a very strong flow of capital from China through Hong Kong into the rest of the world as
well. So Hong Kong has become a channel for funds to be going into China and coming out of China.
That really fuels the economic growth in Hong Kong and the business in Hong Kong because, very often,
we're at both ends of the trade and fund flow, and we're able to capture the business both ways.
12

So, these are some of the reasons why we've been able to grow faster than the GDP growth in a country.
Is this sustainable with the way the business is growing, Middle East for example that there's still plenty of
oil money being generated and purchasing a lot of business products from, say, China and the rest of
Asia-Pacific. We see that growth continuing because we have been able to benefit from the economic
growth in the country and actually doing better because we have been able to capture the growth in both
ways.
Q2: Revenues by distribution Channel and investments in Asia
Ian Smillie
It's Ian Smillie from ABN Amro. Can you give us some sense as to the split of where your revenues are
generated from, in terms of distribution channel? Thinking about the branches and the commercial
transactions centers and the direct channels. I guess as a secondary part to that question, you've got a
nice low-cost income ratio. Is there a temptation that at some stage that you allow that to rise for a couple
of years in order to accelerate your delivery of the revenue opportunity, and perhaps that might involve a
faster build-out of the commercial transaction centers?
Margaret Leung
On your first point, I don't think we have actually divided our income or profit by channels. Because we
offer channels or the flexibility of using different channels to all our customers. So customers that are
Internet-based, they may use the Internet, they want to come to a branch, they use the branch. If they
want to use the call center, they use the call center. But we do not actually cover by channels.
On the second part, will we be investing more in Asia? The answer would be yes. If the KEB acquisition
goes through, that will be quite a big investment in Asia. As you can see, in the news that we have
released in the past few months, actually we've been investing in Asia as well. There have been quite a
number of investments in India, for example, up to whatever the government is allowing us to buy. Also,
we are forming joint ventures in insurance in quite a number of countries. We are setting up subsidiaries
of insurance in quite a number of countries; that includes China, Taiwan, Vietnam and India.
So, yes, we are prepared to invest in Asia in order to generate future growth. Will that have a negative
impact on cost income ratios? Maybe, but at the moment, as you quite rightly pointed out, it's very, very
low.
Q3: Return on equity and yearly comparison
Arturo de Frias
It's Arturo de Frias from Dresdner Kleinwort. One question regarding ROEs -- if I do a kind of approximate
calculation and I assume that, I don't know, the equity consumption of your lending portfolio should the in
the area of 10%, you would be generating ROEs close to 40% this year. You might not have exactly
these numbers, but I'm sure you're going to be a very approximate figure and obviously 40% is a very
nice ROE.
So two questions from that side -- is this comparable with the returns you have been generating in
previous years? This is the kind of ROE you would expect to have in different sides, or it should be
higher, or it should be lower?
13

Margaret Leung
As Sandy had pointed out in his presentation, the way that we measure our results is using ROEs, RWAs
and also other measures as well. But at the same time, we are more moving towards measuring our
performance on the Basel II compliant basis, by locating cost of capital in individual countries are
measured that way.
So while we do not entirely agree with figures that you have come up with, I would say the ROE or the
rate of return, in whatever denomination that you use, in Asia or emerging markets is naturally higher than
in the more developed countries.
Arturo de Frias
Comparing to previous years, it is getting better, or is stable, or is falling? You would expect it to fall in
future years because of the investment? What would be the kind of impression?
Margaret Leung
As a region, we have been improving, but of course individual countries, there are differences. I
mentioned about a couple of impairment charges in the countries, and of course the ROE will be
impacted this year because of the impending charges. But a a region, we're doing very well.
Q4: India: cross-selling in the business and product driving the growth
Raul Sinha
This is Raul Sinha from Lehman. Just if I could push you for a bit more detail on growth in India where
PBT certainly is doubling every year. You mentioned that the growth on the liability side of the business is
very strong, especially in SMEs. Credit growth in the country is something like 30%, 40% in the last few
years, coming down now. Could you give us an idea if there is a lot of cross-sell in the business? What
kind of products are really the ones that are driving this growth?
Margaret Leung
I must point out that the reason why the percentage is so high is because it comes from a low base.
There is one slide that I indicated that India, as of the first half of this year, only accounted for 8% of the
entire Asia-Pacific income, ex-Hong Kong. So, you can see that it's much smaller than Singapore or UAE
or China. That is the reason why the growth rate is so spectacular.
Come back to the point of where do we get the income from? It's from liabilities, naturally. We're doing a
lot of trade and doing a lot of receivable finance. Receivable finance is the largest. In terms of Asia-
Pacific, India is the second largest outside of Hong Kong. Because of the very strong trade flow that India
has with the rest of Asia, particularly with China, we've been able to capture that business. So trade is a
very important factor.
Payments -- payments and cash management is a very strong proposition in India as well. If you look at
the equity market, they have a very buoyant equity market, so it has come down slightly already. We have
been able to generate a lot of non-fund income through the capturing of the IPO process. So yes, there
14

has been sustainable and long-term growth, particularly including the number of customers and cross-
selling more products to them.
Q5: Insurance joint ventures and expected insurance growth within the CMB division
Derek Chambers
Derek Chambers from Standard & Poor's Equity Research. You mentioned insurance. I wonder if you
could put in context how much of the expected insurance growth will be in the CMB division. Perhaps is it
possible to say a bit about yesterday's announcement about insurance joint ventures in China and
Taiwan, and again how much of that is related to the CMB division?
Margaret Leung
I don’t think, at this point in time, we have a figure of what percentage of our income is from insurance,
but our Group CEO has given us the imperative of making sure that 20% of our income eventually will
come from insurance. That's the reason why we have been investing quite actively into the insurance
space.
These joint ventures that we're going to form, subject to regulatory approval, in China is a step in the right
direction. Even before turning up this joint venture, we already have a 20% or roughly below 20% equity
in the second-largest insurance company in China, Ping An Insurance, and the branch that we're setting
up in Taiwan is another step towards the insurance business.
So where do we want to bring it to be? I think, eventually, we want 20% of our income to be coming from
insurance. But at this point in time, we do not have a figure of how much income is generated from
insurance yet.
Okay. In that case, can I hand over to Chris, who will be talking to you about North America? Thank you.
P R E S E N T A T I O N – N O R T H A M E R I C A
Chris Davies
[Slide: North America]
Okay, thanks, Margaret. Good afternoon, everybody. Chris Davies, representing North America. I'm here
to talk with you about the exciting opportunities we see for our Commercial Banking proposition in North
America. Our platform there consists of a combination of established and newer offices across the USA,
Canada and Bermuda. We continue to focus on aligning our offering with the strategic direction of CMB
globally, and are finding that, as regards both international banking and excellence in small business, we
have plenty of scope for growth.
[Slide 3.01: CMB financial performance – North America]
Just looking at this chart of our recent financial performance and slide, on the slide in front of you, we are
showing profit growth in our mature market. However, the numbers also reflect recent investment in
strategic U.S. network expansion, which I'll talk about later, as well as the desire currently to be selective
on U.S. commercial real estate activities, which is a large and a strong long-term business for us.
Overall, loan impairment remains modest relative to historic norms.
15

[Slide 3.02: CMB financial performance – North America 1H05 to 1H07]
The numbers also, I should point out, represent profits earned on the ground in the North American.
Albeit the role we play globally, especially as regards our middle-market business, is a very important
source of further value for the HSBC Group in terms of referrals to other territories and I will touch on that
point in some detail a little later on.
[Slide 3.03: CMB in North America – United States of America]
I'd like to talk now about the shape of our U.S. network. Historically, our U.S. operations were very much
centered in the northeastern United States. Although we retain this strong retail market position
throughout New York State, including New York City, we have, in recent years, expanded to cover 16 of
the top 25 economic areas in the U.S.
It's worth pointing out that our U.S. bank, HSBC Bank USA, is a significant national player, is one of the
nation's ten largest banks by assets.
Our small business operations are conducted through a network of 450 retail branches increasingly
spread across the U.S. by in-branch teams of roundabout 350 business bankers. Our middle-market
clients are handled by dedicated Commercial Banking offices which are strategically located throughout
the U.S. Our most recent formal office opening was in Chicago in 2006, and we are in the course of
investigating the potential of Houston as a further site.
I should note that, despite our recent nationwide network growth, we're really starting from a very low
base in terms of market share nationally, and a huge market, especially in our newer locations. For
example, we relatively recently started serving southern California from Los Angeles. There's clearly a
huge and growing demand for international services in that economy. Our business there is already
growing extremely strongly. In summary, we believe there is considerable room for us to grow in the U.S.
in the coming years.
[Slide 3.04: CMB in North America – Canada]
Turning to Canada, our Canadian bank is the leading foreign player, has been for some time, and the
seventh-largest bank overall in Canada. We have an established national network with Commercial
Banking as very much the core activity of that bank. Geographies of note include western Canada with
currently the very vibrant energy sector covered in Calgary, and it partly synergies with that presence the
provoked our interest in Houston -- and the in rapidly growing and diverse economy of the greater
Toronto area.
We are well positioned as the main Commercial Banking alternative to the large Canadian players and
clearly as international experts.
[Slide 3.05: CMB in North America – Bermuda]
Bermuda's banking market is somewhat smaller, is highly concentrated, and through the former Bank of
Bermuda, HSBC is a major player. Our challenge here is to add a vibrant domestic offering to our highly
successful international banking activity down in Bermuda.
I'd like to talk more generally about the middle market now. I think, across the board, we see a huge
opportunity to bring to bear the global capabilities of our group.
16

Whilst Bermuda demonstrably is highly international across the board, we believe that the U.S. and
Canada are becoming ever more so. In the USA, our research shows in excess of 20% of all middle
market companies are using some form of international cash management and 40% of such companies
use suppliers outside the USA. With banks in this market generally tending to compete based on their
local capabilities across the U.S., there's a major opportunity for HSBC to grow nationally from this low
base.
In this middle market, our very brand signifies international. The first international exposure for many
clients and target clients has been Asia. They've seen the brand, and we're finding that, accordingly, the
door is very open for us in terms of talking to new clients, certainly much more so than perhaps a second
U.S. bank for a domestically banked client.
In Canada, the positioning of our franchise has been, since the outset, that of the leading non-Canadian
internationally-minded bank. That continues to be the case today.
Technology, in the form of the Internet, remote deposit capture -- that is an imaging system that allows
clients to deposit checks remotely. And in the U.S., selected use of the HSBC Finance platform helps us
reach out even further from our geographic footprint. We do have genuinely a huge market to aim at.
In addition, in terms of products, we have for the second year running won the Euromoney award for best
cash management in North America. Our local and global payments capabilities are going from strength
to strength. Our real opportunity, though, is joining up with our global colleagues. We have more
capabilities than ever before on the ground to welcome inward business from our group, but we are also a
big generator of group business for other units. Our local differentiation is international, and very often, we
finance local clients in order to help promote the sale of, for example, Asia cash-management services.
We estimate that, of all the revenues generated from our globally managed, high-end domestic North
American clients, upwards of 50% of that revenue arises offshore in other HSBC units, making us one of
the more globally focused franchises within HSBC. As we grow further, we will be aiming to contribute
increasing business flows to our HSBC partners overseas.
We are also taking steps to organize ourselves more effectively to deliver internationally. Global Links
that Sandy and Margaret walked us through further CRM development and thinking about compensation
policy around the international cross-sale all being used to drive us to exploit this potential further.
I'd like now to move on to talk a few minutes about our plans in the small-business market. Across North
America, our SME clients tell us that dedicated business banking service is key. Building from our
broadening retail platform, we are investing to ensure we have appropriately skilled, dedicated
relationship managers in our branches locally connected but supported by centrally managed sales,
marketing and IT resource. Where applicable, we will leverage our international platform with these
clients as well. We believe this approach will allow us to compete very effectively against the range of
local players against whom we must face off in that market.
There is of course in addition, a particular opportunity for us in communities where our brand is well-
known through exposure abroad. Hispanic, South Asian, and Southeast Asian communities are
contributing ever more to the American/North American business theme, and many of our locations help
us serve these segments.
A further general synergy exists with the Premier proposition, as Sandy outlined in his introduction, the
launch of which is being very well-received by business owners and managers across North America. The
sales forces of Premier and SME are closely aligned. They share common training and development
programs and objectives, for example. In particular, a significant conference involving both populations is
taking place in the U.S. on Tuesday.
17

Also, in 2008, in common with colleagues elsewhere, we will be developing a Business Direct proposition
targeted at those clients requiring web and call center based servicing at an attractive price.
We continue across all our businesses to look for opportunities to leverage our offshore servicing
capabilities.
In summary, in North America, we have a profitable business with ample opportunity to grow both locally
and in terms of contribution to the global model. This is a huge internationalizing market, and it is not
optimally served, we believe, as regards to joined-up global proposition. We're getting broader
geographically and technology broadens our reach further. We are organizing ourselves to join up more
effectively globally and our products are improving. We look forward to making increasing contribution to
CMB globally.
I'd like now also to move on and answer any questions that you may have in respect to North America.
So, thank you for your attention.
Q U E S T I O N A N D A N S W E R – N O R T H A M E R I C A
Q1: Impact of the credit market on the US SMEs in existing HSBC markets and commercial real
estate
Stephen Andrews
It's Stephen Andrews from UBS. I think, as analysts and investors, we are all aware of the stresses in the
U.S. housing market at the moment. But can you share some of your observations as to how that is
impacting US SMEs at the moment in your existing markets? Is the liquidity crunch that' gripped the credit
markets now impacting the commercial markets?
Also, I think you mentioned commercial real estate at the start of your presentation. Is that now starting to
show signs of stress?
Chris Davies
Firstly, we've all seen the recent data on new home sales in the U.S., which I think were 8% down on the
previous period, and signs of general softness in that sector, clearly. We have not yet seen a wash-
through in terms of credit quality into our Commercial Banking activities.
I would say, very recently, as recently as indeed the past couple of weeks, there were signs that covenant
structures and pricing are starting to firm up slightly in deals being brought to the market. No doubt that's
kind of a secondary impact of the liquidity issues that certain banks are facing. Otherwise, we have not
yet seen a major impact.
Sorry, what was the second part --?
Stephen Andrews
It was just on the commercial real estate side. I think you mentioned (multiple speakers).
18

Chris Davies
Yes. As far as commercial real estate is concerned, we've had a pretty concentrated portfolio, very high-
quality within that business for a very long time and have had an excellent credit record over the past 15
years or so.
We've been very selective in the lending we've done over the past couple of years. At the moment, it's
softness in demand that we are seeing, certainly, so certain of the investors who are perhaps sitting on
real estate portfolios they've constructed over the past year or two are now focusing on selling out, but no
real credit issues in the product portfolio at this point.
Q2: Revenues generated from internationally focused business
Ian Smillie
Ian Smillie from ABN. Could you give us some sense how much of your revenues comes from
internationally focused business? You gave a number I think for a part of your customer base, but could
you give us a sense for the overall revenues.
Chris Davies
Yes, clearly. I mean, in U.S., I mean in Canada probably 50% of the business is, to an extent, is real
estate related. The remaining 50% of core middle market activity in Canada, that portfolio has been
assembled, really, on the basis of international needs. A good slug of that product-wise -- I can't give you
an exact number but that would be a significant proportion of that activity has an offshore dimension,
particularly in terms of trade.
As far as the U.S. is concerned, our activities there really fall into three pieces. I mean, we have the
commercially real estate proposition. There is actually a global dynamic to that. A lot of that activity is
happening on the ground in the U.S., but the relationships are very often or have been historically quite
often Asian relationships, Hong Kong investors in particular, who moved to start investing in the West
Coast a decade or so ago. So there is an international dynamic to that business despite the fact that the
current revenue arises onshore.
Another third of the revenues is really associated with the SME proposition in the U.S. That's I think
essentially at this stage more of a domestic business. It's very deposit-led. So the opportunity in the
current international revenue flows are really around that middle market business.
Now, the names where we monitor, closely, I guess in detail, the global revenues, are the top end of that
portfolio. At those revenues, we estimate around-about 50% of that value is arising offshore.
Geographically, again, because of where we've come from, we still have a pretty strong geographic
concentration in the U.S., in the northeastern United States, particularly in upstate New York. That's
inherently less international than the newer sites. So you know, there are strong elements of international
activity but I think what you will see is we're going to be deploying more scale in the more favorable
demographics for international business going forward and we will be leading with that proposition. I
would expect to see a significant share of international activity in those newer sites over time.
Ian Smillie
So just to make sure I've understood, of the U.S. revenues, approximately a third from commercial real
estate, a third from SME, and a third from the middle market?
19

Chris Davies
It's going to vary over time, but that's a fair approximation.
All right, well, thank you very much indeed. I will now hand over to Jose Manuel, who is going to talk
about Latin America.
P R E S E N T A T I O N – L A T I N A M E R I C A
[Slide: Latin America]
Gracias, Chris. Hola. Buenos dias a todos. Bienvenidos! That's as local as I'm going to get for you today I
hope.
I will try to provide a brief overview of our market position, the broad opportunities that we see in the
region, and how we plan to lead international business throughout Latin America and be the region's best
bank for small businesses.
[Slide 4.01: CMB financial performance – Latin America]
I will run through the results pretty quickly, the first half of 2007. Our pretax profits were very strong, 50%
higher than last year's. CMB in this region contributes to around 35% of total Latin America tax after profit
-- profit after-tax, and 26% of -- it was last year, so the growth that we've had is quite considerable. Also,
Latin America represents 10% from total CMB profit. It's up from 7.5% last year.
Net operating income benefit from the growth in domestic economies and the region and increased as
HSBC built market share, increasing to 38% year-on-year. The underlying cost growth, though, was only
18%, reflecting heavy investments across the region. These have enabled us to quadruple the loan
portfolio in the last two years, getting to nearly 13 billion today.
The loan growth has mainly been driven by leveraging on the HSBC brand, on its footprint, a larger client
base and a better understanding of the needs of small businesses, and also by taking advantage of
benign economic fundamentals in most of the region, investing in real estate financing, particularly in
housing, that is a top priority for local governments and provides support for us to do it. These, by the
way, have also continued growing, 20% year-on-year.
[Slide 4.02: CMB financial performance – Latin America 1H05 to 1H07]
Commercial Banking in Latin America continues to improve its cost efficiency. It has come down to 55%
from 60% it was in 2004. There is, however, substantial room for further improvement as cost/income
ratio is well above average for the CMB in other regions. We are confident, though, that as we roll out the
HSBC culture, focus on productivity measures and we joined-up the region, we will obtain a ratio more in
line with HSBC standards.
We have achieved strong organic growth in Mexico and Brazil with underlying PBT up 35% and 32%,
respectively. This is the first time our results also include Grupo Banistmo in Central America, and four
months' operations from Banco Nazionale de Lavoro in Argentina. We still have a huge concentration in
these three countries, Mexico, Brazil and Argentina. There's something we need to do in that capacity
and we feel confident that we're on our way there.
20

[Slide 4.03: Latin America – growth in Emerging Market economies drives opportunities]
Latin America comprises 17 countries, plus the Caribbean, Spanish being the primary language. The total
population is near 550 million people, largely under-banked, and economic growth is projected at 4.9%
according to the IMF.
As seen in this graph, the larger markets -- Mexico, Brazil and Argentina again -- serve as the prime
targets for small and medium-sized business segments and present areas to develop direct channel and
straight-through processing capabilities as well. Most of their economies are smaller in relative size to the
big three. However, their strong GDP growth offers potential to finance the mass consumer SMEs and
affluent segment.
Only two countries in Latin America have double-digit inflation in 2006. With the exception of Panama,
only -- I mean most of them are along sides 20% or lower of the GDP in terms of credit, so huge potential.
[Slide 4.04: HSBC geographic footprint – 1997]
It is impressive what HSBC has achieved in terms of footprint in Latin America over the last ten years. Six
offices - 10 offices in six countries…
[Slide 4.05: HSBC geographic footprint – 2007]
…whilst today we are present in 17 countries with over 4000 offices. As a newly formed region, there is
quite a lot of room for development as we employ 68,000 people and service more than 0.5 million
clients.
HSBC originally acquired substantial retail business in both main markets; that is Brazil and Argentina. So
Corporate and Commercial Banking business has been developed from within, over the last few years,
post-acquisition. Best Practices are being put to work integrating the most recent acquisitions, specifically
Banistmo, the leading financial services company in Central America, and the operations of Banco
Nazionale de Lavoro in Argentina, as I mentioned.
Indeed, we're also expanding our presence in other markets like Peru, which was opened in 2006, and
the acquisition of Lloyd's operations in Paraguay. Grupo Banistmo was bought for a little less than $2
billion last year. The transaction gave HSBC presence in five new countries. We are now number one in
Panama and in Honduras. We are number three in Costa Rica and El Salvador. We have a foothold in
Colombia and operations in Nicaragua. Grupo Banistmo adds 1.3 billion customers to HSBC and 253
branches across the region with a population of 83 million people.
The rebranding of Banistmo across the five countries -- Colombia, Costa Rica, Honduras, El Salvador
and Nicaragua -- was completed in July of this year. Whilst the merger of the two banks in Panama is
expected for early 2008. Client feedback so far is quite positive about the rebranding, and the rebranding
itself has been opening many doors for our relationship managers into subsidiaries of large international
companies, our global CMBs, where Banistmo had no access previously to the acquisition. These have
consolidated our position as the leading financial institution in Latin America with an unrivaled distribution
network spanning from the Rio Grande in Mexico to Tierra del Fuego in Argentina and provides a solid
platform for growth going forward.
{Slide 4.06: Payments and cash management]
This brings me to connectivity. We see increasing competition both from local and international
institutions across the region. And hence, our need to differentiate ourselves by providing the means.
HSBC is well positioned to take advantage of regional cash management opportunities. Our capabilities
in the three countries are great, though there is some room for improvement in the other countries. We
21

have to roll out and we're in the process of rolling out an IT platform in order to provide regional solutions
across the region to the clients, connecting them across the Bank.
HSBCnet is our proposition, and it is already available in five countries, and eight more countries will be
added out before year-end. Our PCM offering was put to the test when a large Commercial Banking client
in the U.S., a world-recognized brand in entertainment, was setting a show on ice in eight different
countries in Latin America. They needed bank accounts and implement a cash-management solution in
these countries in a very short period of time. With international banking centers working together in both
Mexico and the U.S., documents were coordinated, procedures streamlined, and the solution was
implemented in record time. Only one bank in the region could provide such a fast, efficient and a holistic
solution to their cash needs. Also, given our expensive regional footprint, the demand for regional RFPs,
request for proposals, is increasing heavily from clients who see, in HSBC, the opportunity to join up their
banking in the region through only one institution.
[Slide 4.07: Latin America intra-regional trade flows: building scale for future growth]
Trade-related solutions are also a common requirement to our client base and represent, without a doubt,
one of our key drivers for connectivity across the region. Trade flows within Latin America are significant,
and we must ensure that we capture these by leveraging in our unparalleled footprint. Tremendous
achievements has been attained in countries like Mexico, Brazil and Argentina, but again further
developments are expected in the other countries from basic, traditional solutions, that’s DCs, to factoring
receivables finance, and the more sophisticated supply chain which also incorporates our payment and
cash-management offering.
We have brought, to the region, dedicated trade resources, particularly from Hong Kong, where we have
a proven record in the trade business, and offers Best Practices for us to replicate throughout Latin
America. We are also developing a common platform for trade across the region, which will foster efficient
processing and allow us to roll out HSBCnet Internet trade services platform into smaller countries very
rapidly. This will confirm HSBC as the market leader in trade in the region.
We plan to replicate Brazil's successful China trade desk as well. We are starting with Mexico, which has
proven successfully in capitalizing business referrals and opportunities between Latin America and China,
and then roll out to the rest.
[Slide 4.08: Strategic focus: leading international business]
To leading international business, we must continue to capture business flows in between our client base
and our geographic footprint. That space is ours, and ours to maintain; we've said it. We have established
international banking centers in the three main countries and have expanded the responsibilities to cover
the whole of the region. We are permeating a standardized and joined-up approach to business and
ensuring Best Practices are shared across the region, particularly in the recent acquired Banistmo
operations. We have identified our regional client list and implemented an on-site coaching program
based on relationship management techniques and focused on driving sales and customer profitability.
Examples of Best Practices found in Argentina who has developed over time a pretty solid agribusiness
model, achieving rates above 100% during 2007. We are looking to take this successful proposition and
convert it into a regional model for agribusiness across Latin America.
My team is also ensuring that all of our relationship managers around the Group are aware of our regional
presence. Specifically, we are working closely with the U.S. where a bilateral agreement was launched
this week after having successfully piloted ten client relationships on both sides of the border. This will
detonate further growth in cross-border referrals between the U.S. and Mexico, and in the rest of Latin
America. We are developing a similar proposition with China.
22

[Slide 4.09: Strategic focus: leading international business]
HSBC, as you know, differentiate itself from other banks in the world by offering a truly global approach to
emerging markets whilst highlighting our local knowledge. I will give you a few examples that highlight
how we are joined up in the region and our ability to connect companies globally. A large multilevel
marketing firm for recently expanded into Mexico. Following a recommendation from another client, the
international director walked into an HSBC branch in the middle of nowhere asking and inquiring about
our local services. The branch contacted our International Banking Center, and the Center's team
coordinated resources with the bank to meet client's basic banking requirement in Mexico, very quick and
very efficiently. Given this excellent experience, they have rolled out banking with us in India and Turkey
and further expansion to come in Latin America.
One last example would be a client in HSBC Brazil in the process of expanding its operations in Latin
America. The gave us a shot, given our extensive footprint. This high-tech chemical development and
production company is now working with HSBC in Colombia and Argentina, where credit facilities have
been provided using the newly HSBC global cross-border credit policy.
As you can see from these simple cases, by leveraging the Group's international footprint, our knowledge,
while combining them with the innovative ideas and experience of our local staff, we are driving growth
and capturing market share while creating shareholders' wealth in Latin America, key emerging markets.
[Slide 4.10: Strategic focus: to be the best small business bank]
Last but not least, small businesses -- these account, as Sandy said, in any given country for a
substantial part of its GDP, mostly above 50%, and for the vast majority of the established companies.
The percentage of small businesses having readily available access in this region to banking services is
pretty, pretty low and therefore represents a huge opportunity and potential for growth.
HSBC has led efforts in creating solutions to service this segment, investing to understand their need and
their repayment behavior. Packaged solutions have been developed, both in Mexico and Brazil, and we
are looking at ways of tropicalizing these services so that we can offer similar services throughout Latin
America for the SMEs. In particular, supporter of our growing SMEs business, we're offering receivables
financing and factoring in the major countries.
Our foothold in the SMEs market also brings us new opportunities to other customer segments. For an
example, in Brazil, a manufacturer of food products uses microdistributors to sell their products to stores
throughout the country. HSBC Brazil has just negotiated a partnership with this company to be the
financial partner, providing these small distributors with current accounts, small credit limits, and leasing
for financing cars and laptops. By providing a solution to the distributors, this large corporate in Brazil is
now keen to work more closely with HSBC for all of their banking needs.
Small businesses, as has been mentioned, are valuable for the loyalty and the ancillary businesses that
they generate. We have seen an increase on transactional volumes, and they play a major role in
strengthening our deposit base, which supports our strategy to self-fund the growth of our assets --
through the growth of deposits.
Besides thanking you for your patience and spending a lovely Friday afternoon with us, I would like you to
take away with you three major points:
Latin America offers HSBC great potential for continued future growth.
The small business segment offers exciting opportunities in the region, and HSBC knows this like
nobody else.
23

Trade services, receivables finance on our cash management solutions with the (inaudible) support
from our international banking centers will drive the goal of becoming the lead international bank
across the region.
Muchas gracias and I would take any questions if you have them.
Q U E S T I O N A N D A N S W E R – L A T I N A M E R I C A
Q1: Hurdle rates in key geographies & capital allocation per geography and time hurdle to deliver.
Competition in the region.
Ian Smillie
It's Ian Smillie from ABN. Of all the geographies that have presented so far, you've got probably one of
the most compelling growth outlooks as you've persuaded us. Can you give us a sense of what hurdle
rates you apply to each of the key geographies when you come to thinking about where to allocate your
capital and what time horizon you allow yourself to deliver that?
As a second question, could you perhaps comment on the competition as you see it, as which other
banks are credibly competing on the same strategy as you are? When you say that you aspire to be the
best, who perhaps might be ahead of you right now?
Well, hurdles? Hurdles are many. We've had them in the past and will continue to have them going
forward. These are volatile markets, but things that from time to time we give it a serious thought of - it
has to be with a potential slowdown in the U.S. economy. I mean, that's an obvious one, not only for
Mexico but across the region.
Allocating capital, I would say that's done on a centralized basis. It's not only within the region. We do not
allocate within the region, but rather we allocate capital across the world. So we, as a region or any given
country, has to really put forward and justify getting the Group's attention for additional capital.
In terms of your second question --?
Ian Smillie
How long do you allow yourself deliver returns on your investments and to add to the hurdle return on
your investment? Do the target rates vary by the three big countries that you described to us?
Well, the returns on the investments have proven to be extremely profitable and in the first few years of
operation, we've been pretty close to getting everything back, so that's not really a problem. It's keeping
up really with the growth rates that we have demonstrated to the market that we can without losing track
of being prudent and really understanding our client needs, particularly in the small business segment,
which is the most vibrant and dynamic going forward.
24

Ian Smillie
The lessons you can learn from the best-in-class competition?
Competition? Well, the usual suspects and more -- obviously, another sort of global bank is all around
and purchasing behind HSBC's acquisitions. We have the Spanishs bank obviously having a good
presence in the region. For a change, you would see a Canadian bank that has done some acquisitions
as well in several other countries. But more so, you'll find, in each one of these countries, that you have
regional banks, pretty strong regional banks as well as local banks, all of them really quite strong in their
markets and in the knowledge of the customer base. Therefore, I would emphasize the differentiation for
HSBC. It's really connecting them across the region.
A lot of people whereas in the past historically have been looking North, that has started to change a bit
and people are looking South and within the region. So, we're there for them.
Q2: SMEs cross-border facility
Anthony Broadbent
Anthony Broadbent from Sanford (inaudible). I wonder if you could tell us a bit more about the Global
cross-border credit facility, bearing in mind that SMEs tend to behave a lot like consumers. I guess I'm
particularly interested in how you've managed to do that from a regulatory perspective, and also from a
risk-control perspective.
Okay, the SMEs is done pretty close in terms of modeling, on a scoring basis. So obviously, that does not
get into the international side. All of these are really local and we deal with them locally, so it's really not
related to the international side that you referred to.
Anthony Broadbent
Okay, I --
Unidentified Participant
(inaudible)
-- the umbrella. It's a basic umbrella facility, pretty common in Europe, where once you know the parent
and you leverage all the credit risk of the parent to provide support to the subsidiaries across the region.
I'm sorry. Yes, but SMEs are not in that category
Q3: Growth in loans is faster that the growth in PBT – expectation on a more stable ROE
25

Arturo de Frias
Yes, Arturo de Frias from Kleinwort. Talking about these very high returns that you're getting in your
investment, if I do I think quick numbers that I did with Asia, so I get to very similar conclusions, around
40% ROEs. But there is a slight difference here from what we see in Asia. This is that the growth in loans
is much faster than the growth in PBT, so clearly the ROE must be falling. It's probably normal, given
these fantastic ROEs that you have had after your acquisitions. But I mean is this a trend that you would
expect going forward? Is it because of something special that you would expect a more stable ROE, etc.?
Thanks.
I mean acquisitions have been the name of the game and growing from them. We, as I mentioned in the
presentation, countries like Brazil and Mexico acquired retail operations, so we've been developing the
corporate business from there. Therefore, the sky is the limit. Yes, it has been pretty strong growth; that
starts to stabilize as we go forward. But nevertheless, there's always, at the end, the Banistmo in Central
America, which will provide additional growth rates, or places like Paraguay when we acquired another
operation, and places like Peru that it's continued growing -- not as fast as we've seen it. Again, when you
see the cost of these acquisitions, really the underlying cost is much lower. So, the returns are there and
will start pumping up even further as we go along, provided we don't have another acquisition.
I think we have an Internet question.
Q4: Views on Mexican competitor’s Texan presence
Danielle Neben
We have a question from the Internet from J.P. Crutchley at Merrill Lynch. Your competitors have either
been building up a presence in Texas or developing strategic links with banks with a Texan presence.
HSBC is relatively underweight in the U.S. Sunbelt. Does this constrain your ability to develop business
as an international bank in Mexico?
Thank you for the question. No, I don't think that it constrains. It always poses an opportunity to continue
growing. It's definitely an area of opportunity for this bank, but we do have some alliances and get plenty
of referrals from the U.S. We have a partnership; we have a trade bank in the U.S. that sends quite a bit
of referrals to us, as well as obviously the relationship we have with HSBC in the U.S., both on the
consumer side and on the CMB side with Chris. That provides a lot of business for the time being. So we
have our hands full but definitely an area of development going forward.
Okay? Thank you very much. I will turn it over to Alain to cover Europe.
26

P R E S E N T A T I O N - E U R O P E
Alain Kier
[Slide: Europe]
Thank you, Jose Manuel. As Sandy said earlier, we are focused on emerging markets. We are also
getting growth out of mature markets. Europe as a region has a diverse range of those markets. We have
the mature-but-still-growing presence in the UK, France and Germany. We have the exciting opportunities
before us in Central and East Europe. Of course, we are keen to aggressively expand the exciting
footprint we have in southeastern Europe.
[Slide 5.01: CMB financial performance – Europe]
Looking at the financials, you can see that we grew our assets and liabilities, like in many other regions,
broadly in balance. You can see that PBT was up around 15%. This is all the more commendable when
one considers that, for the equivalent period in the first half of '06, there was a $38 million gain on sale of
Cyprus Popular Bank. Also in these numbers is the inclusion in the first half of '07 within the CMB
numbers of the Group's insurance broking business. Now, if we exclude this one-offs and we adjust for
currency issues, the underlying performance was cost growth of 2%, revenue growth of 7%, generating
therefore positive jaws of 5%.
There are still many opportunities to take this performance forward. Where there is in the SME
opportunities that we see in countries as diverse as Poland and Greece, or the micro markets of Turkey,
Armenia and Malta, and I will touch on that as we go through.
Looking at impairments is the previous slide, you will have seen that those touch 77% growth. Now, within
that, one has to understand that Europe has the largest share of CMB's assets, around 46%. This
impairment charge represents around 60% compared to 55% last year.
I'm also conscious that that is 59 basis points charge relative to 40 last year. How is that? Well, of course
we've had a series of years of a benign economic environment. There are fewer recoveries coming
through. And the first half saw a little bit of stress and downturn. A major contributor or culprit, if you like,
was the UK, where I think we saw the increasing personal indebtedness that has occurred over the last
five years, coupled with borrowing costs that have risen over the last 18 months, begin to take a little bit
of effect in the UK consumer spend and that is in areas like UK retail. It's important to stress that these
impairments are almost exactly in line with our expectations.
Looking forward, what do we expect? Well I think actually it's more of the same. At the moment, the
pattern of impairments we are seeing remains broadly in line with our expectations.
[Slide 5.02: CMB financial performance – Europe 1H05 to 1H07]
As far as the credit crunch is concerned, we are seeing no dramatic change in business opportunities, but
we are seeing the ability perhaps to address the issues of pricing spread and covenants.
Looking at the graph behind me, which shows the cost efficiency ratio, you will see that whilst it came
down from 51% to 48% and this plateau-ed in the second half, I would ask you to bear in mind that
second half takes into account $122 million of cost from the insurance broking business that I explained
we've now taken on. It's important that, in some of our mature markets, we continue to focus on straight-
through processing to reduce the unit costs, particularly around our core products, and drive that cost
efficiency ratio.

[Slide 5.03: Commercial Banking in Europe]
Our franchise in Europe, as you can see, has grown and continues to grow. We are not everywhere, and
that's quite deliberate. In addition, we've just received recent banking licenses to open in Russia and
Georgia. Where we've looked to focus has been where we can get a real return from our resources, so
there are countries here you might expect us to be in. But we have deliberately chosen not to be there
because we don't believe we can have a sustainable presence, niche in return that justifies that
investment. We do, therefore, continue to be selective when we look at countries where we can expand
our representation. At the moment, we're actively considering opening in the Ukraine, in Romania, and in
Hungary. Obviously any approval is subject to local egulatory approval there.
[Slide 5.04: Europe – developed markets]
Turning, if I may, some of the major countries and some of the opportunities that are before us, if we look
at the UK, which represents around 80% of Europe's PBT -- now I hope that number would come down,
not because the UK would perform poorer but because we would see the benefits of the investment we've
put in the exciting emerging markets coming through. If we look at the UK, we've had over the years a
continuing success in our corporate banking centers aiming at that mid-market enterprise market, very
good sweet spot for our international business. A recent survey by Mercer Oliver Wyman shows that our
market share in that segment had now grown to 19%.
Looking at our SME proposition, we've been able to transform the way we deliver that to our customers.
We've looked at the patterns of behavior and what they want to do in terms of their interactions with us.
We've responded to that research by opening out-of-town commercial centers. That allows them easier
access to our relationship managers and our relationship managers to them, easier access for paying
rather than having to flog into a time park and all the rest of the inconvenience that brings.
We've looked at the opportunities that multicultural Britain affords us. We've got an active multicultural
banking team that actively targets and has seen great success in markets like South Asian banking,
Chinese community here, most recently our most exciting: the Polish business community.
We've also targeted, over the last 18 months, the professional community in the UK. This is a liability-rich
segment, and it's one where a focused approach is yielding better benefits. Very excitingly in the UK,
about 18 months ago now, we launched Business Direct. This was born of customer research from small
business and starts who were quite clear to us that they didn't feel that they needed their branch
relationship. Technology and the way business is done, particularly through the Internet, means they can
undertake their business with us through the Internet to the telephone. The deal we've done is say, well,
you can do that transaction free if you stay within, like, that virtual world. We're now seeing the success of
that feed through. Almost a quarter of new accounts to HSBC this year have come through Business
Direct. That success and that traction has obviously spurred us, along with our colleagues you've heard
speak already, to look at how we can take that model to other countries.
Turning if I may now to France, France in a way is a work in progress. We're seeing benefits from the
significant investment we've made in systems over recent years. Of course, we've rebranded recently as
well. We've recently appointed a new management team in France to make sure that we can truly
leverage and drive returns from those investments.
One of the keys, we believe, to doing that is to have increased segmentation in our business in France.
We're making traction with that already. There is a commitment and a plan to roll out the successful
corporate banking center model in the UK and in other countries to Paris in this year and beyond Paris
next year. We're working with them to drive greater portfolio management and segmentation into the SME
side. Releasing relationship management resource and time to focus on truly valuable activity. We are
ready moving to integrate the receivables finance business in France with that in the UK, delivering a
lower-cost platform, enhanced products, and faster revenue growth.
28

Looking now at Germany, the PBT we get from Germany is really only part of the picture. Our business in
Germany has a great position in the Mittelstand, and they've been very good at targeting the international
business there through a specialist international business team. That has allowed them to refer lots of
business to my colleagues and myself. In particular, a great example of how they've gone about doing
this is that international business team has seconded one of their experienced relationship managers to
work with the team in Shanghai to focus on the German manufacturing companies that have moved their
center of production to the Yangtze River delta. Domestically, they continue still to have a very strong
investment bank with that Mittelstand which continues to perform well.
Finally, turning briefly to Malta, even there where we have a very strong brand presence, a very deep
branch presence, we can still find opportunities. We've recently modernized our facilities for customers by
opening our state-of-the-art business banking center in Qormi, which I recently visited. Reviewing the
business there, even though we are in the SME segment, it's quite clear in doing so that there are
opportunities further down in the micro segment that maybe a model like Direct could exploit, and that will
be tackled in 2008.
[Slide 5.05: Emerging Europe]
In terms of emerging markets, I'd like to turn with some anticipation to Turkey. Turkey has been a great
success story for us. Profits are up 26%, fueled in no small part by the returns we are seeing from the
strategy we had of launching SME there in 2006. That's really coming through.
You know, Turkey has Europe's third-largest population. It's got 6%, on average, GDP growth and the
SMEs form over 90% of that private sector in that economy. It's a rich market for us, which we are
thoroughly intending to exploit. We've now rolled out over 60 branches to tackle that opportunity. We're
adding to that by broadening our product base so, in 2008, we will be launching a leasing product and a
receivable financing product designed to further boost that SME drive in Turkey. That's not to say that our
corporate and mid-market enterprise business in Turkey has been laggardly in any way; it has performed
extremely well. It's just that the returns we're seeing from our SME investments are truly more exciting.
Turning to Central and Eastern Europe, about which you've heard quite a lot, it's no accident that, next
week, Sandy will be hosting the heads of CMB from around the world in Prague, in part to celebrate us
being in Prague for ten years but also to reemphasize the fact that we are focused on emerging markets.
As I have said, we have obtained banking licenses in Russia and Georgia and will be opening
Commercial Banking activities there soon. We are taking an experienced head of CMB to Moscow from
our business in the UK.
Turning, if I may, to some of the revenues we're seeing out of Poland, they're coming through very
strongly. From starting only a couple of years ago in Warsaw, we're now in four other cities. If I can
pronounce them correctly: Krakow, Gdansk, Poznan, and Katowice.
Put all this together and look at the SME opportunities that we have in Poland, the Czech and the Slovak
Republic, we are truly excited about the opportunities that lie before us in Central-East Europe. We are
also looking there to see whether we can launch Business Direct in Poland in 2008 and possibly also in
the Czech Republic.
We are also looking to see whether we can have and build a stronger receivables finance business based
off the platform that we can export from the UK. Of course, our trade and payments businesses stand us
in great stand there as we seek to become the international commercial bank of choice.
I think I've got a (inaudible). Thank you.
29

Looking now, if I may, at one of the two core strategies that we've emphasized throughout these series of
presentations, leading international business, as I think Jose Manuel said so articulately, this is the
ground that we have to earn. If you look across Europe in our mid-market space, we've invested there by
creating international business teams in Germany I've talked about, in France and in the UK, making sure
they join up, making sure that we have coordinated marketing to exploit the opportunities, not just within
region but outside the region.
Of course, we have the platform of trade and payments to stand us in great stead as we drive forward into
this. Increasingly, receivables finance will be an international platform as well.
The success of our international banking centers which allow a customer, in their own time zone and in
their own language, to open accounts anywhere in the world and arrange facilities anywhere in the world,
have truly -- that success has been expanded into making sure that virtually all the countries in Europe
are now covered.
We've invested in issues like allowing our customers in the UK online within an STP process, straight-
through-processing, to make cross-border payments. We are the first and I believe only major UK bank
that allows that to happen, making sure that the risks are also lower, and that the customer can have
online transparency of the payment.
We are also keen to make sure that we internationalize our people. So many of the heads of CMB are
seconded from various countries, and we have a program of short-term cross-border postings to make
sure that we internationalize our people in order that they can better express our internationalism to our
customers.
Finally, in terms of some metric around this, you'll see that, in Europe, we've increased our global links
referrals to other parts of the Group by over 100%, making sure that internationalism counts.
Looking now at the best bank for small business, I've covered this in part through what I've talked about
through the presentation, but if I may just recap, because I think it truly is important, we have
opportunities that we are exploiting with an SME plan in countries like Poland, Greece, Czech, Slovakia.
We're looking at the micro segments in a variety of places -- the UK, France, Turkey, Malta, Armenia.
Receivables finance is a great platform to fuel some of that growth as well. We are making sure that we
use Group systems to keep costs down, that we keep to core products and that we managed straight-
through processing to make sure we can deliver all of this in a cost-efficient way.
In overall summary, therefore, I believe, in Europe, the mixture of getting more growth of our mature
markets; combined with great revenue opportunities in our emerging markets, lead us to having optimism
about the future which I hope is not ill-founded.
I would be very happy to take questions at this point.
30

HSBC Commercial Banking - Transforming Opportunity

HSBC Commercial Banking - Transforming Opportunity

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