HSBC Commercial Banking - Transforming Opportunity

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Transcript of HSBC Commercial Banking - Transforming Opportunity

  • Commercial Banking transforming opportunity

    London28 September 2007

  • 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 Groups expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Additional detailed information concerning important factors that could cause actual results to differ materially is available in our Annual Report.

    Forward-looking statements

    Commercial Banking transforming opportunity

  • Commercial Banking transforming opportunity

    Sandy Flockhart

  • Commercial Banking transforming opportunity

    1.01

    Agenda

    ...............................

    ...............................................................................

    ................

    Overview

    Asia

    North America

    Latin America

    Europe

    Closing remarks and Q&A

    Sandy Flockhart

    Margaret Leung

    Chris Davies

    Jose Manuel Dominguez

    Alan Keir

    Sandy Flockhart

  • Strategy and objectives

    Be the leading international business bankBe the best bank for small businesses in target markets

    Unique global footprint to bridge developed to developing markets

    Global transaction banking and receivables financing expertise

    Segmentation and tailoring of services

    Multi-channel relationships and direct banking

    Driving efficiencies

    Strong customer group connections

    1.02

    Commercial Banking transforming opportunity

  • 100

    300

    500

    700

    1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

    World trade Global GDP

    The world as we see it evolving

    Emerging markets growing faster than rich

    countries

    World trade growing faster

    than GDP

    Level 1990 = 100

    Source: HSBC estimates

    1.03

    Commercial Banking transforming opportunity

    In ten years time

    65%

    35%

    Today

    59%

    41%

    Ten years ago

    Share of Global GDP

    50%50%

    Source: HSBC estimates

    G7 Non-G7

  • Core strength in Commercial Banking 1H07 highlights

    Revenue

    US$6.6 billion(up 23%)

    Profit before tax (PBT)

    US$3.4 billion(up 20%)

    PBT contribution

    24.2%(of Group total)

    Revenue growth

    Double digit(fifth year running)

    Cost efficiency

    44.2%(maintained flat ratio)

    Global Links

    3,100 referrals(up 37%)

    Presence

    63 countries and territories

    Relationship Managers

    6,900(up 11%)

    Customers

    2.7 million(up 3%)

    Notes:(1) All growth rates are quoted comparative to 1H06(2) Financial data as reported in 2007 Interim Report

    1.04

    Commercial Banking transforming opportunity

  • CMB financial performance

    Share of PBT by region

    Commercial Banking transforming opportunity

    1.05

    Notes:(1) Net operating income before loan impairment charges and other credit risk provisions(2) Financial data as reported in 2007 Interim Report

    Europe37%

    North America

    14%

    Latin America

    10%

    Hong Kong22%

    Rest of Asia-

    Pacific17%

    Developing markets

    Developed markets

    US$m 1H07 1H06 % growth

    Net operating income(1) 6,580 5,363 23

    Loan impairment charges (431) (260) 66

    Total operating expenses (2,907) (2,385) 22

    PBT 3,422 2,862 20

    Cost efficiency ratio % 44.2% 44.5%

    Loans and advances to customers (US$bn)Customer accounts (US$bn)

    186

    205

    152

    166

    22

    24

  • Commercial Banking transforming opportunity

    Developing countries growth enginePBT Rest of Asia-Pacific (including the Middle East)

    US$m

    498

    597

    0

    100

    200

    300

    400

    500

    600

    700

    1H06 1H07

    +20%

    PBT Latin America

    237

    352

    0

    50

    100

    150

    200

    250

    300

    350

    400

    1H06 1H07

    +49%US$m

    PBT Hong Kong

    US$m

    587

    760

    0

    100

    200

    300

    400

    500

    600

    700

    800

    900

    1H06 1H07

    +29%

    Unrivalled distribution network in Asia and a growing footprint in the Middle East and Latin America Successful regional alignment for business referrals between China, Hong Kong, Taiwan and Vietnam Significant growth in India, Malaysia and Latin America Unique and dedicated focus on small and medium enterprises (SMEs) Connectivity allows us to link a growing pool of internationally-oriented mid-market enterprises

    (MMEs)/large corporates

    1.06

  • Commercial Banking transforming opportunity

    Developed countries international connectivity and segmentationPBT Europe

    Strong performance of CMB in Europe Expanded CMB network in the USA Increasing demand for CIBM services from MMEs/large corporates Leading the way in direct banking and channels Connectivity to developing markets

    1,236

    1,076

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    1H06 1H07

    +15%US$m

    PBT North America

    464 477

    0

    100

    200

    300

    400

    500

    600

    1H06 1H07

    +3%US$m

    1.07

  • CMB segmentation strategy

    Commercial Banking transforming opportunity

    Business Direct

    Micro-SME lending

    Business cards

    Cross-border referral

    Cross-border account opening

    Regional alignment

    Business review

    Portfolio management of credit

    Loyalty strategy

    Corporate

    Mid-market

    Small business

    Micro business

    Enhanced relationship management

    Initial public offering and advisory services

    Debt and capital finance

    Products and services matched to segments

    Valuing differences and understanding aspirations

    Referrals between customer groups fuelling growth

    Multi-channel distribution strategy

    1.08

  • Commercial Banking transforming opportunity

    To be the leading international business bank

    End-to-end transaction coverage Join up the bank to capture both

    ends of the customer transaction Leverage strengths in trade

    finance, payments and cash management, and links to CIBM

    International Banking Centres Added seven International

    Banking Centres (IBCs) in 1H07 Network now covers 23 countries

    Global Links Over 3,000 referrals, up 37

    per cent Total transaction values

    US$3.2 billion

    End-to-end relationship management Corporate International Teams now

    in six countries concentrating the expertise

    247 Global Relationship Managers (RMs) across 30 countries serving customers with multi-country requirements

    1.09

  • To be the best bank for small businesses in target markets

    Commercial Banking transforming opportunity

    SMEs are key to growth in emerging markets

    2.5 million SME customers globally; HSBCs unique positioning for growth

    Joining up SME capabilities to unlock growth potential Transfer of sophisticated segmentation

    techniques to support targeted acquisition of new customers

    Export of credit scoring capabilities from developed markets to developing markets

    Selected roll-out of our Direct Banking model Building connectivity with Personal Financial

    Services

    Focus on core products targeted to the right customers and fulfilled via straight-through processing

    SME customer base June 2007

    60% of existing SME customers are in developed markets

    However, customer acquisition is being driven by Asia, Latin America and the Middle East

    46% 54%

    1.10

    New customers acquired % of total added June 2006 to June 2007

    60%40%

    Asia and Latin America

    Europe and North America

    Asia and Latin America

    Europe and North America

  • New channels

    Commercial Banking transforming opportunity

    Comparing 1H07 with 1H06- Registered customers up 20%, active up 28%- Online transaction volumes up 58%- Web traffic up 47%

    2G platform now launched in eight countries, with seven more planned in the next 12 months

    0.8

    0.9

    1.0

    1.1

    1.2

    1.3

    1.4

    Dec-05 Jun-06 Dec-06 Jun-07

    N

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    Internet banking

    Over 30,000 CMB customers

    Ranked #2 in website benchmarking against all global competitors

    Key functionality that supports customersinternational needs

    Text message services UK Transaction verification Turkey Giro Facil by ATM Brazil

    Mobile phones/ATMs

    HSBCnet

    1.11

  • Cross-border cooperation in Emerging Markets

    Commercial Banking transforming opportunity

    Prague

    Shanghai

    Anhui

    1.12

  • CMB joined up within HSBCAn incubator for Group businesses

    Commercial Banking transforming opportunity

    CMB

    Micro business

    Small business

    Mid-market

    Corporate

    PFS/Premier

    Private banking

    Retirement so