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2. Forward-looking statements
This presentation and subsequent discussion may contain certain
forward-looking statements with respect to the financial condition, results of
operations and business of the Group. These forward-looking statements
represent the Group’s expectations or beliefs concerning future events and
involve known and unknown risks and uncertainty that could cause actual
results, performance or events to differ materially from those expressed or
implied in such statements. Additional detailed information concerning
important factors that could cause actual results to differ materially is available
in our Interim Report
2
3. Reported results
Profit before tax Attributable profit
US$10.2bn, down 28% US$7.7bn, down 29%
(down 22% excl. dilution gains in 1H07) (down 22%, excl. dilution gains in 1H07)
Earnings per share Return on total shareholders’ equity
US$0.65, down 32%
12.1% compared to 19.1%
(down 24% excl. dilution gains in 1H07)
Dividends per share1 Tier 1 capital
8.8% against 8.7% at end 2007
Up 6% to US$0.36
Core Equity Tier 1, 7.5%
Note:
(1) In respect of 1H08, as disclosed in the 2007 Annual Report and Accounts
3
4. Performance in 1H08
• Resilient performance in most difficult market for several decades
• Balance of earnings between markets and businesses helped cushion market
turmoil
• Profitable in all our Customer Groups, including Global Banking and Markets
• Profitable across all our Geographies, with the continued exception of
North America
• Unwavering commitment to financial strength
• Continued our dividend policy and commitment to make capital available for
future investment
• Costs well controlled
• TSR performance top five in peer group
4
6. Summary of results
% Change
(US$m) 1H07 1H08 vs 1H07
Net operating income before loan impairment charges 38,493 39,475 +3
Loan impairment charges (6,346) (10,058) +58
Net operating income 32,147 29,417 -8
Total operating expenses (18,611) (20,140) +8
Profit before tax 14,159 10,247 -28
Profit attributable to shareholders 10,895 7,722 -29
Cost efficiency ratio (%) 48.3 51.0
Earnings per share (US$) 0.95 0.65 -32
Dividends per share (US$), in respect of 1H07, 1H08 0.34 0.36 +6
9.31 8.82
Tier 1 ratio (%)
Notes:
(1) Basel I
(2) Basel II
6
7. Underlying growth, 1H08 vs 1H07
1H07
Dilution gains2
1H07 restated, excl Rest of %
restated1
US$m and disposals dilution gains 1H08 Acquisitions HSBC Change
Net operating income before
loan impairment charges 39,824 1,114 38,710 39,475 68 39,407 +2
Loan impairment charges (6,470) - (6,470) (10,058) - (10,058) +55
Net operating income 33,354 1,114 32,240 29,417 68 29,349 -9
Total operating expenses (19,349) (55) (19,294) (20,140) (28) (20,112) +4
Profit before tax 14,676 1,059 13,617 10,247 28 10,219 -25
Notes:
(1) Restated for constant currency
(2) Gains arising from dilution of interests in Chinese associates
7
8. Underlying growth, 1H08 vs 2H07
2H07
Dilution gains2 restated, excl
2H07 Rest of %
restated1
US$m and disposals dilution gains 1H08 Acquisitions HSBC Change
Net operating income before
loan impairment charges 40,827 72 40,755 39,475 13 39,462 -3
Loan impairment charges (10,918) - (10,918) (10,058) - (10,058) -8
Net operating income 29,909 72 29,837 29,417 13 29,404 -1
Total operating expenses (20,658) (50) (20,608) (20,140) (11) (20,129) -2
Profit before tax 10,168 22 10,146 10,247 2 10,245 +1
Notes:
(1) Restated for constant currency
(2) Gains arising from dilution of interests in associates
8
9. Special factors
US$m 1H07 2H07 1H08
Profit before tax 14,159 10,053 10,247
Dilution gains1 1,076 16 -
Fair value of own debt – change in credit spread 172 2,883 824
Goodwill impairment (North America PFS) - - (527)
Global Banking and Markets write-downs - (2,135) (3,931)
Profit before tax, adjusting for special factors 12,911 9,279 13,881
Effective tax rate (%) 18.7 11.1 18.9
Note:
(1) Gains arising from dilution of interests in associates
9
11. Capital strength continues
Tier 1 capital ratios (%), Basel II
10%
8.8%
8.7%
9%
0.9% 1.1%
8%
0.3% 0.2%
7%
6%
5%
4%
7.5% 7.5%
3%
2%
1%
0%
31-Dec-07 30-Jun-08
Core Equity Tier 1 Preference share capital Innovative Tier 1 capital
11
12. Credit quality
US$m % of avg advances annualised
Loan impairment charges 1H07 2H07 1H08 1H07 2H07 1H08
Personal Financial Services
Europe 1,127 917 963 1.53 1.21 1.28
Hong Kong 74 101 34 0.40 0.51 0.17
Rest of Asia-Pacific 252 300 375 1.68 1.80 2.09
North America 3,774 8,135 6,952 3.46 7.35 6.68
Latin America 701 791 1,060 8.01 7.56 9.34
Total 5,928 10,244 9,384 2.63 4.38 4.12
12
13. Credit quality
US$m % of avg advances annualised
Loan impairment charges 1H07 2H07 1H08 1H07 2H07 1H08
Commercial Banking
Europe 256 259 285 0.61 0.53 0.53
Hong Kong 1 27 28 0.01 0.21 0.20
Rest of Asia-Pacific 54 7 (16) 0.46 0.05 (0.09)
North America 46 145 156 0.27 0.77 0.81
Latin America 74 138 110 1.25 1.92 1.27
Total 431 576 563 0.49 0.56 0.50
US$m % of avg advances annualised
Loan impairment charges 1H07 2H07 1H08 1H07 2H07 1H08
Global Banking and Markets (24) 62 115 (0.02) 0.05 0.08
Private Banking 9 5 (4) 0.05 0.02 (0.02)
13
14. Write-downs in Global Banking and Markets
A. Trading
1H08 Net exposure at 2H07 Net exposure at
US$bn write-downs 30 June 08 write-downs 31 Dec 07
Sub-prime mortgage-related assets 1.0 2.9 1.0 3.7
Non-sub-prime credit trading assets 1.4 8.9 0.6 9.8
Leveraged loans 0.3 8.3 0.2 8.7
Fair value of derivative transactions with monolines 1.2 1.3 0.3 1.2
Total 3.9 2.1
14
15. Write-downs in Global Banking and Markets
B. Available for sale ‘Asset Backed Securities’ exposure
Available for sale
reserve relating Impairment to
Balance Subprime to subprime subprime
sheet HELOC HELOC HELOC
exposure Alt-A exposure Alt-A exposure Alt-A exposure
US$bn 30 June 2008 30 June 2008 30 June 2008 1H08 Comments
Securities Investment (0.134) US$1.3bn first loss
21.3 7.7 (2.9)
Conduits and protection to be
Structured Investment absorbed by capital
Vehicles note holders
48.4 9.4 (3.6) (0.055) Charge to P&L
Directly held
69.7 17.1 (6.5)
Total
15
16. Market risk management
Daily distribution of Global Markets' revenues (US$m)
Daily Group VAR (trading and non-trading) (US$m)
25
250
20
20
200
16
14
No of days
15
150 12
11
10 8
100 7
7
6
5
4 4 4
5 3
50 2
2
1
1 1 1
0
0
-174-162 -106 -94 -82 -70 -58 -46 -34 -22 -10 2 14 26 38 50 62 74 86 98 110122
Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08
US$m
Value at risk for the Group1 Bases for valuing
(US$m) 1H07 2H07 1H08 trading assets 2H07 1H08
At period end 84.2 70.1 144.2 US$446.0bn US$473.5bn
Quoted marked price 47% 47%
Average 62.5 67.9 135.5
Valuation techniques
– Using observable inputs 50% 50%
Minimum 43.8 57.3 59.8
– With significant
Maximum 98.1 85.9 230.5 non-observable inputs 3% 3%
Note:
(1) Trading and non-trading
16
18. Measuring our success
Good progress on key metrics
Financial measures Target range 1H08
Return on total shareholders’ equity 15-19% through the cycle 12.1%
Cost efficiency ratio 48-52% 51.0%
Tier 1 capital (Basel II) 7.5-9.0% 8.8%
Total shareholder return Above peer group average Top 5
18
19. Profitable in all Geographies – with the continuing
exception of the US
% change
Profit (loss) before tax
Geography % share 1H08 vs 1H07 1H08 vs 2H07
+0 +0
Asia 65%
+27 +7
Latin America 12%
+28
Europe 51% +14
North America (28%) -219 -23
-250 -200 0 50 100 -40 -20 0 20
% change
Profit before tax
Customer Group US$m 1H08 vs 1H07 1H08 vs 2H07
Other -189 (-2%) -51
Personal Financial Services +98
822 (8%)
+35
Commercial Banking +24
2,313 (23%)
2,690 (26%) Global Banking and Markets -35 +37
+12
+5
Private Banking
4,611 (45%) -108
Other -118
US$10,247m -200 -100 0 100 200
-150 -100 -50 0 50
19
20. Strong growth across Asia1
Profit before tax of US$6.7bn
% change
Profit before tax
1H072 1H08 vs 2H072
Customer Group US$m 1H08 vs
-6
Other -623 (-9%) Personal Financial Services +14
177 (3%)
+14
Commercial Banking +35
2,742 (41%)
2,571 (38%) Global Banking and Markets +22
+53
-2
Private Banking -18
n/a
Other n/a
Total +20 +0
US$6,697m
1,830 (27%)
-40 -20 0 20 40 60 -10 0 10 20 30
• PBT up by 20% vs 1H07, excluding dilution gains
Notes:
(1) Asia includes Hong Kong and Rest of Asia-Pacific including Middle East
(2) Excludes gains arising from dilution of interests in Chinese and other associates
20
21. Solid results in Hong Kong against exceptional 2007
Profit before tax of US$3.1bn
% change
Profit before tax
Customer Group US$m 1H08 vs 1H07 1H08 vs 2H07
Other -725 (-23%) -12
Personal Financial Services +7
+1
123 (4%) +14
Commercial Banking
-13
Global Banking and Markets +10
770 (25%)
-15
Private Banking -24
2,036 (66%)
Other -290 -284
869 (28%)
Total -8 -23
US$3,073m
-300 -20 0 20 -300 -20 0 20
• PBT down by 8%, but flat excluding impairments in value of regional strategic
investments
• Fall in PBT for Personal Financial Services 1H08 vs 2H07 reflects impact of decline in
global equity markets on fee income and investment returns for insurance
• Decline in PBT for Global Banking and Markets 1H08 vs 2H07 due to
weaker credit trading markets
21
22. Record performance in Rest of Asia-Pacific, excluding Middle East
Profit before tax of US$2.6bn
% change
Profit before tax
1H08 vs 1H071 1H08 vs 2H071
Customer Group US$m
Personal Financial Services +44 +13
57 (2%)
326 (12%) +73
Commercial Banking +33
52 (2%)
Global Banking and Markets +75 +42
Private Banking -5
653 (25%) +53
-53
Other -2
1,546 (59%)
Total +58 +34
US$2,634m
100 -50 0 50 100
-100 -50 0 50
• Exceptional growth in PBT, up 58% to US$2.6bn
• Global Banking and Markets is the major contributor generating 59% of the region’s
profit, and grew profits by 75% to US$1.5bn, based on strong revenue growth from
Balance Sheet Management, foreign exchange and securities services
• Commercial Banking increased PBT by 73% to US$0.7bn which was largely volume-
driven following customer acquisition
Note:
(1) Excludes gains arising from dilution of interests in Chinese and other associates
22
23. Rest of Asia-Pacific footprint delivers strong growth1
Profit before tax 1H08 by country
% change
Profit before tax2, US$m 1H07 2H07 1H08 1H08 vs 1H07 1H08 vs 2H07
Rest of Asia-Pacific, excluding Middle East 1,662 1,959 2,634 +58 +34
Australia 51 73 100 +96 +37
India 299 230 371 +24 +61
Indonesia 58 46 66 +14 +43
Japan 18 25 4 -78 -84
Total Mainland China2 473 812 907 +92 +12
Associates2 387 717 748 +93 +4
Other mainland China 86 95 159 +85 +67
Malaysia 145 185 209 +44 +13
Singapore 267 283 340 +27 +20
South Korea 58 65 177 +205 +172
Taiwan 43 80 115 +167 +44
Other Rest of Asia-Pacific, excluding Middle East 250 160 345 +38 +116
Notes:
(1) Excluding Middle East
(2) Excludes gains arising from dilution of interests in associates
23
24. Exceptional growth in the Middle East
Profit before tax of US$990m
% change
Profit before tax
Customer Group US$m 1H08 vs 1H07 1H08 vs 2H07
+67 +74
Personal Financial Services
45 (5%)
2 (0%) 209 (21%) +40 +18
Commercial Banking
Global Banking and Markets +53
+97
426 (43%)
Private Banking +100
+18
Other +2
+41
Total +63
308 (31%)
US$990m 0 20 40 60 80
0 20 40 60 80 100 120
% change
Profit before tax, US$m 1H07 2H07 1H08 1H08 vs 1H07 1H08 vs 2H07
Middle East 606 701 990 +63 +41
Egypt 72 81 115 +60 +42
United Arab Emirates 295 322 522 +77 +62
Other Middle East 128 172 178 +39 +3
Total Middle East (excl. Saudi Arabia) 495 575 815 +65 +42
Total Saudi Arabia 111 126 175 +58 +39
24
25. Balance sheet driven growth in Latin America
Profit before tax of US$1.3bn
% change
Profit before tax
Customer group US$m 1H081H08 vs 1H07 1H08 vs 2H07
vs 1H07
Personal Financial Services +21 -7
Other -4 (0%)
8 (1%)
+17
Commercial Banking +6
383 (30%)
468 (37%) Global Banking and Markets +51 +45
Private Banking -20 -47
n/a
Other n/a
Total +27 +7
411 (32%)
US$1,266m
% change -60 -40 -20 0 20 40 60
-60 -40 -20 0 20 40 60
• PBT growth of 27% reflected strong growth in customer advances, particularly in
Brazil for Personal Financial Service and Commercial Banking
• Benefit of business expansion partially offset by increase in loan impairment charge in
Mexico
• Strong growth in Global Banking and Markets from higher net interest income and
foreign exchange
25
26. Tight cost control and brand strength help grow profit
in Europe – Profit before tax of US$5.2bn
% change
Profit before tax
Customer Group US$m 1H08 vs 1H07 1H08 vs 2H07
Personal Financial Services +119 +36
144 (3%)
579 (11%) 1,324 (26%) Commercial Banking +57 +52
Global Banking and Markets -29 +40
1,190 (23%)
+17
Private Banking +37
+235 -86
Other
1,940 (37%) Total +28 +14
US$5,177m 300 -100 -50 0 50 100
-100 0 100 200
• 45% growth in PBT for UK to US$3.5bn with strong performance from Personal Financial Services
and Commercial Banking
– Called the top of the real estate market in 2006
– Reduced unsecured lending
– Strong cost discipline
– Growth in customer deposits and mortgage balances
• Global Banking and Markets remained profitable despite write-downs
• Disposal of French regional banks will be reflected in 2H08 with a gain on sale of US$2.1bn
26
27. North America continues to suffer from weak economy
and market turmoil – Loss before tax of US$2.9bn
% change
Profit (loss) before tax
US$m
Customer Group 1H08 vs 1H07 1H08 vs 2H07
Personal Financial Services (2,050) +32
-238
-3
Commercial Banking 430 -10
Global Banking and Markets (1,625) -16
-473
-49
Private Banking 58 -3
-81
n/a
Other 294
-23
-219
Total (2,893)
0 -100 -50 0 50
-500 -400 -300 -200 -100
• Personal Financial Services recorded a pre-tax loss of US$2.1bn (vs PBT US$1.5bn in
1H07) following 84% increase in loan impairment charge. The loss was less than in 2H07
with a 15% reduction in the loan impairment charge
• Global Banking and Markets incurred further write-downs of US$2.3bn as a
consequence of the market turmoil and produced a loss of US$1.6bn
• Commercial Banking profits declined by 10% due to the increase in loan impairment
charge from the low levels in 1H07
27
28. Personal Financial Services
Weak US performance offsets good growth in other Geographies
% chg US PFS Rest of Group PFS
US$m 1H08 vs 1H07 vs 2H07
Net operating income before 1H08-2.2bn 1H08 4.5bn
loan impairment charges 22,422 +7 -
+33%
1.3bn 3.4bn
1H07 1H07
Loan impairment charges (9,384) +58 -8
-3.0 -2.0 -1.0 0.0 1.0 2.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0
Net operating income 13,038 -13 +8
• Flight to quality continued with strong customer
Total operating expenses (11,099) +6 -2
accounts growth at 14%
• Global initiatives making strong headway
Operating profit 1,939 -57 +144
– HSBC Premier: 2.4m customers, up 10% v 2H07
Associates and JVs 374 +76 -1 – Direct banking: gross balances US$16.1bn, up 19% v 2H07
– Cards: growth in emerging markets up 5% v 2H07
Profit before tax 2,313 -51 +98
• In the UK, Group has strengthened its position
in the mortgage market (from 3% in March to 12% in
Customer loans
May of gross lending)
and advances (US$bn) 458.3 - -1
• Revenue momentum maintained in Hong Kong
Customer accounts (US$bn) 474.3 +14 +5
and Rest of Asia-Pacific
28
29. HSBC Finance Corporation
Continued reduction of exposure in the US
• Delinquencies continued to rise broadly in line
180
with expectations
170.6 168.3
Customer loans1
167.9 167.3
170 • Continued to tighten underwriting standards in
161.0
US$bn
all businesses
156.6
160
• Reduced size of loan portfolio
150
• Focus on cost reduction measures
140
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
8% 14
12.2
12.1
11.7
2+ delinquency1
12
7.8%
9.6
7.5% 10
7.8
7.2 US$bn
7.0% 8
6%
6
5.7%
4
4.7%
2
4.2%
4% 0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Note:
(1) IFRS management basis for US, excludes operations in UK and Canada
29
32. HSBC US Finance Corporation
Vehicle Finance will be run off
Unsecured Personal Credit Vehicle Finance
30 20
12.9 12.9
12.7 12.8
12.6 12.5
18.4 18.5 18.5 18.1 17.5 16.8
20
US$bn
US$bn
Loans
10
10
0 0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
2.6 3.5% 3.7% 3.5%
2.6
20% 2.6 3 4% 1
2+ delinquency
3.0% 2.9%
2.2
1.9 2.4%
15% 1.8
2 0.5
14.4% 15.0% 15.4% 0.4 0.4
US$bn
US$bn
0.4 0.4
10% 2% 0.3
10.5% 11.9% 1
9.9%
5%
0% 0 0% 0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Management
• In July, it was decided to cease originations of new
Actions
• Continued to tighten underwriting criteria and
business and we will manage an orderly run-off of
increase collections
the portfolio
32
33. Commercial Banking
Another strong performance from a core business
• Strong profit growth (+35%), even excluding
% chg
card acquiring gain (+22%)
US$m 1H08 vs 1H07 vs 2H07
• Growth strong in the Middle East, Asia-Pacific
Net operating income before
and Brazil. Share of profits from emerging
loan impairment charges 8,156 +24 +11
markets increased from 52% to 54%1
• Rapid revenue growth (+29%) from trade and
Loan impairment charges (563) +31 -2
supply chain and (+44%) foreign exchange
Net operating income 7,593 +23 +12
reflected the Group’s “Leading International
Business” strategy
Total operating expenses (3,280) +13 -2
• Value of cross-border deals up 83% through
Global Links
Operating profit 4,313 +33 +25
• Success for the “Best Bank for Small
Associates and JVs 298 +66 +9
Business” strategy evident in 8% growth in
customers and contributed strongly to income
Profit before tax 4,611 +35 +24
growth
• Continued expansion of physical and online
Customer loans (US$bn) 238.1 +28 +8
distribution capabilities
Customer accounts (US$bn) 247.7 +21 +4
Note: (1) Excluding the card acquiring gain
33
34. Global Banking and Markets
Emerging markets strength helped business remain profitable in
difficult market conditions
• 35% decline in PBT after write-downs of
% chg
US$3.9bn. Improved performance since 2H07
US$m 1H08 vs 1H 07 vs 2H07
• ‘Emerging markets-led and financing-focused’
Net operating income before
strategy enabled Group to support clients in
loan impairment charges 7,379 -13 +10
cross-border transactions into and out of
Loan impairment charges (115) n/a +85 emerging markets. PBT up 51% in emerging
markets
Net operating income 7,264 -15 +9
• In Global Markets
– Record revenue from foreign exchange
Total operating expenses (4,827) +8 -1
– Strong results in rates
– Growth in securities services
Operating profit 2,437 -40 +38
– Challenging markets in credit trading and Principal
Investments
Associates and JVs 253 +122 +31
• Global Banking: greater transaction volumes
Profit before tax 2,690 -35 +37 led to growth in income for payments and cash
management
• Balance Sheet Management income
significantly higher
34
35. Global Banking and Markets
Strength in emerging markets, improvement in profit from 2H07
and resilient revenues across our businesses
Regional mix Growth in profit before tax (%)
Profit (loss) before tax 1H08 US$m % 1H08 vs 1H07
Asia +53
Asia 2,742 102
Latin America +51
Latin America 383 14
Europe -29
Europe 1,190 44
-473
North America
North America (1,625) (60)
Total -35
Total 2,690 100
-500 -50 0 50 100
Management view of total operating income
1H08 vs 2H07
US$m % chg
1H08 vs 1H07 vs 2H07
Asia +22
Global Markets 1,688 -56 -11
Global Banking 2,432 +23 +10 Latin America +45
Balance Sheet Management 1,630 +213 +131
Europe +40
Global Asset Management 669 +5 -4
North America -16
Principal Investments 167 -78 -66
Total +37
Other 833 +1 +14
Total operating income 7,419 -13 +10
-20 0 20 40 60
35
36. Private Banking
Continued profit growth
• PBT up 5% with strong performances in
% chg
US$m 1H08 vs 1H07 vs 2H07 Switzerland and Monaco
• Success with inward referrals from other
Net operating income before
loan impairment charges 1,916 +12 +5
Customer Groups resulted in US$3.4bn of
Loan impairment recovery 4 n/a n/a
net new money (US$2.0bn in 1H07)
Net operating income 1,920 +12 +5
• Client assets increased by 14% to
Total operating expenses (1,098) +18 -
US$421bn against June 2007 and stable
Operating profit 822 +5 +13
against December 2007
Associates and JVs - - -
• Total client assets, which include some
Profit before tax 822 +5 +12
non-financial assets held in client trusts,
amounted to US$499bn and included
Client assets (US$bn)
US$19bn of net new money
At 1 January 421 +26 +14
Net new money 15 -12 -21
Value change (20) n/a n/a
Exchange and other 5 -38 -80
At 30 June 421 +14 -
36
37. Insurance
Continued success in difficult market conditions
• Insurance contributed US$1.6bn, 16% of Group
PBT by region
profit before tax, up 4% on 1H07
0.6
• Strong bancassurance performance:
US$bn
0.3 – Net earned premiums up 30% to US$5.2bn
– Europe up 54% (excl. acquisition & disposals up 21%)
– Asia up 15%
0.0
– Latin America up 23%
Asia excl Europe Latin North – North America insurance fee income up 34%
Ping An America America
• In Asia profit was 83% below 1H07 due to lower
1H07 1H08
investment returns in difficult equity market
PBT by insurance business, 1H08 conditions
• Indian and South Korean joint ventures launched
M anufacturing (59%) • Number 1 for Income Protection in the UK1
• “Best Life Insurance Provider” in Brazil2
Distribution (25%)
• Product excellence awards in France3
Ping An (16%)
• Preferred Strategic Partner relationships now in 23
countries with 82 product launches or migrations
Notes:
agreed during 1H08
(1) Based on market share: Association of British Insurers results for 1Q08
(2) Awarded by Gazetta Mercantil in 2007
(3) “Labels d’Excellence 2008” awarded by Les Dossiers de l’Epargne
37
38. Growing revenue and improving efficiency through
Joining Up the Company
• HSBC Premier: 2.4m customers each generating more than US$2,000
annualised revenues. 208,000 new customers in 1H08
• Global Links: Cross border referrals increased by 126% in number and 83%
Revenue
in value to US$5.6bn
• Global Transaction Banking: revenues increased by 17% to US$4.6bn
• One HSBC cards • One HSBC call centre
• One HSBCnet • One HSBC collection
Costs
• One HSBC internet • One HSBC customer data management
• Core Banking • Core HSBC payments
Cost growth lower than world inflation
38
39. Key highlights of first half performance
Geographic performance Customer Group performance
• Europe benefited from good cost control • Good growth in Personal Finance Services, excl.
(PBT +28%) US (PBT +33%)
• Exceptional growth in Middle East (PBT +63%) • Commercial Banking, strong performance (PBT
+35%)
• Latin America was strong (PBT +27%)
• Global Banking and Markets – emerging markets
• Good growth in Asia (+20%, excl. dilution gains)
strength profitable (PBT -35%, +37% v 2H07)
• Solid results in Hong Kong against exceptional
• Private Banking continued growth (PBT +5%)
2007 (PBT flat, excl. impairments in regional
• US Personal Financial Services loss making but
strategic investments)
reduced from level in 2H07
• Record performance in Rest of Asia-Pacific, excl
Middle East (PBT + 58%, excl. dilution gains)
• North America suffers weak economy and market
turmoil
• Strong cost control
Operating
• Brand strength evident in flight to quality
performance
• Benefits of ‘Joining Up the Company’ being realised
39
41. Outlook
The World HSBC
• Our strategy continues to be aligned
• Near-term outlook remains negative
with global trends
with significant uncertainty
• Advantages:
• Pressure from inflation on growth in
some fast-growing economies – Strong brand
• Decline in credit availability as – Capital and liquidity strength
financial markets deleverage – Broad-based business with international
increases risk of delinquency and connectivity
default • World’s leading international bank in
• Emerging market growth expected to emerging markets
hold up reasonably well, albeit with
less momentum
41
43. Appendix contents
Asia 44
Hong Kong 45
Rest of Asia-Pacific (excl. Middle East) 46
Middle East 47
Latin America 48
North America 49
Europe 50
Profit (loss) before tax by country 51-52
Personal Financial Services 53
Commercial Banking 54
Global Banking and Markets 55
Private Banking 56
HSBC Finance Corporation 57-68
43
44. Asia
Growth in profit before tax (%)1
Business mix
Profit before tax, 1H08, US$m 1H08 vs 1H07
Personal Financial Services +14
Other -623 (-9%)
177 (3%)
Commercial Banking +35
Global Banking and Markets +53
2,742 (41%) 2,571 (38%) -18
Private Banking
n/a
Other
+20
Total
US$6,697m
1,830 (27%) -40 -20 0 20 40 60
Customer lending, 30 June 2008, US$bn 1H08 vs 2H07
2.0 (1%) Personal Financial Services -6
8.2 (4%)
Commercial Banking +14
Global Banking and Markets +22
55.3 (26%) 78.5 (37%)
Private Banking -2
Other n/a
0
Total
69.5 (32%)
US$213.5bn (10) 0 10 20 30
Other
Note:
(1) Excludes gains arising from dilution of interests in Chinese and other associates
44
45. Hong Kong
Business mix Growth in profit before tax (%)
Profit before tax, 1H081, US$m 1H08 vs 1H07
Personal Financial Services +7
Other -725 (-23%)
123 (4% ) +14
Commercial Banking
Global Banking and Markets +10
770 (25% ) 3
Private Banking -24
2,036 (66% ) 1
Other -290
869 (28% ) Total -8
US$3,073m
-300 - 20 0 20
Customer lending, 30 June 2008, US$bn 1H08 vs 2H07
2
Personal Financial Services
1.8 (2% ) -12
4.9 (5% ) Commercial Banking +1
4
-13
Global Banking and Markets
20.3 (20% ) 40.6 (41% )
-15 3
Private Banking
1
Other -284
Total -23
US$99.7bn
32.1 (32% )
-300 - 20 0 20
Notes:
(3) Reduced PBT resulted from diminished demand for equity-related structured products
(1) Decrease reflects impairment of US$296m in the value of several of HSBC’s strategic investments in the region
(4) Decline in PBT due to write-downs in monoline exposures and weaker trading markets
(2) Fall in PBT for PFS 1H08 vs 2H07 reflects impact of decline in global equity markets
on fee income and investor return on securities held by insurance
45
46. Rest of Asia-Pacific (excl. Middle East)
Growth in profit before tax (%)1
Business mix
Profit before tax, 1H08, US$m 1H08 vs 1H07
+44
Personal Financial Services
57 (2% )
+73
Commercial Banking
326 (12% )
52 (2% )
Global Banking and Markets +75
-5
Private Banking
653 (25% )
Other-53
1,546 (59% ) +58
Total
US$2,634m -60 -40 -20 0 20 40 60 80
Customer lending, 30 June 2008, US$bn 1H08 vs 2H071
+13
Personal Financial Services
0.2 (0% )
3.3 (4% )
+33
Commercial Banking
31.4 (35% ) Global Banking and Markets +42
28.6 (32% )
+53
Private Banking
-2
Other
+34
Total
25.3 (29% )
US$88.8bn -60 -40 -20 0 20 40 60 80
Note:
(1) Excludes gains arising from dilution of interests in Chinese and other associates
46
47. Middle East
Business mix Growth in profit before tax (%)
Profit before tax, 1H08, US$m 1H08 vs 1H07
Personal Financial Services +67
45 (5% )
2 (0% ) Commercial Banking +40
209 (21% )
Global Banking and Markets +97
Private Banking +100
426(43% )
Other +2
Total +63
308 (31% )
US$990m 0 20 40 60 80 100 120
Customer lending, 30 June 2008, US$bn 1H08 vs 2H07
Personal Financial Services +74
6.4 (26% ) 6.5 (26% ) Commercial Banking +18
Global Banking and Markets +53
0
Private Banking
Other +18
Total +41
12.1 (48% )
US$25.0bn
0 20 40 60 80
47
48. Latin America
Business mix Growth in profit before tax (%)
Profit before tax, 1H08, US$m 1H08 vs 1H07
Personal Financial Services +21
Other -4 (0%)
8 (1% ) +17
Commercial Banking
383 (30% ) Global Banking and Markets +51
468 (37% )
-20
Private Banking
Other n/a
+27
Total
411 (32% ) US$1,266m -40 -20 0 20 40 60
Customer lending, 30 June 2008, US$bn 1H08 vs 2H07
Personal Financial Services -7
Commercial Banking +6
10.7 (20% )
Global Banking and Markets +45
1
Private Banking -47
24.5 (45% )
Other n/a
Total +7
19.1 (35% )
US$54.3bn -60 -40 -20 0 20 40 60
Note:
(1) Improved performance in Brazil was offset by expenditure in Mexico
48
49. North America
Business mix Growth in profit before tax (%)
Profit (loss) before tax, US$m 1H07 1H08 1H08 vs 1H07
Personal Financial Services -238
Personal Financial Services 1,488 (2,050)
Commercial Banking -10
Commercial Banking 477 430
Global Banking and Markets -473
Global Banking and Markets 436 (1,625)
Private Banking -3
Private Banking 60 58
n/a
Other
Other (26) 294
Total 2,435 (2,893) -219
Total
-600 -400 -200 0
Customer lending, 30 June 2008, US$bn 1H08 vs 2H07
Personal Financial Services +32
5.7 (2% )
Commercial Banking -3
27.1 (10% )
201.9 (74% ) Global Banking and Markets -16
37.8 (14% )
Private Banking -49
Other -81
-23
Total
US$272.5bn -100 0 100
49