Hsbc Holdings Plc · LSE:HSBA
Hsbc — Investor Day (September 2004)
25 slides from Hsbc's investor day presentation, Sep 2, 2004
Slide 1: Managing for Growth in Brazil
Managing for Growth in Brazil Youssef Nasr Group Managing Director, South America
Slide 2: Forward looking statements
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 fu
Slide 3: Agenda
Agenda • History of HSBC in Brazil • HSBC Brazil in 2004 • The Brazilian Market • A platform for growth September 2004 3
Slide 4: History of HSBC in Brazil
History of HSBC in Brazil September 2004 4
Slide 5: HSBC Brazil - Milestones
HSBC Brazil - Milestones • 1997 HSBC acquires Banco Bamerindus and related insurance operations • 2000 HSBC acquisitions of CCF and Republic provide HSBC Brazil with local asset management and private banking franchises • 2003 Acquisition of local Bank of America asset management operations • 2003 A
Slide 6: 1997-2003: Control and Profitability Phase
1997-2003: Control and Profitability Phase • Acquired a broken bank with a rural focus and moved swiftly to strengthen controls, IT, and service, and to develop the HSBC brand. • HSBC Group audit standards implemented • IT Contingency site set up, Y2K issues resolved, data warehouse created • Almost
Slide 7: HSBC Brazil in 2004
HSBC Brazil in 2004 September 2004 7
Slide 8: HSBC Brazil platform in 2004
HSBC Brazil platform in 2004 • Full-service financial institution with nationwide distribution, seventh-largest commercial bank in the private sector HSBC Bank Brasil S.A. Losango • 922 branches and 735 mini-branches • 127 outlets • Over 5,000 ATMs • Almost 16,000 partner stores • 2.2 million person
Slide 9: Financial Performance
Financial Performance BRL millions – UK GAAP 1999 2000 2001 2002 2003 1H04 Net interest income 1.524 1.601 1.839 1.842 1.873 1.712 Net Fees & commissions 586 661 852 798 973 616 Dealing profits 94 73 75 260 417 52 Other operating income (incl. Dividend income) 240 289 373 344 350 175 Operating Incom
Slide 10: The Need for Scale
The Need for Scale • With controls in place, the challenge for HSBC Brazil is to generate volume through its infrastructure and leverage the Losango acquisition • Asset indicators show that HSBC continues to lag the market, although the positive impact of Losango is clear from the Personal Lending g
Slide 11: The Need for Scale - cont.
The Need for Scale - cont. • We are also behind the leaders in terms of fees and cost : income ratio. BRL m (Jun04) Fees / Outlet (Jun04) Cost/Income ratio 1.2 70% 1.0 60% 50% 0.8 40% 06 1.1 30% 61% 0.9 50% 52% 55% 55% 0.4 20% 0.5 0.5 0.2 0.4 10% 0.0 0% HSBC Unibanco Itaú Bradesco Real-ABN HSBC Real
Slide 12: The Brazilian Market
The Brazilian Market September 2004 12
Slide 13: A More Stable Economy
A More Stable Economy • At USD492bn, Brazil´s GDP is similar to Mexico and dwarfs the rest of South America. • Brazil is entering the eleventh year of the ‘Plano Real’, which successfully ended decades of hyper-inflation. • The Lula Government is continuing the conservative economic policies of its
Slide 14: A More Stable Economy - cont.
A More Stable Economy - cont. • The trade balance is a growing source of foreign exchange, replacing FDI • Total trade rose 12.7% in 2003 to USD121bn. In the eight months to August 2004, trade volume had already reached USD101bn 40 30 20 US$bn 10 0 -10 -20 1995 1996 1997 1998 1999 2000 2001 2002 200
Slide 15: The Demographics
The Demographics • With 182 million inhabitants, Brazil is the world´s fifth-most populous country. • 81% of the population are urban, and 60% are under 25. • 57% live in the richer South / South-East, but there are sizeable populations in the North-East and Centre-West regions. • Given a stable eco
Slide 16: Credit Demand
Credit Demand Private Sector Credit / GDP* 160% 140% 120% 100% 80% 60% 40% 20% 0% Mexico India Brazil South United United Korea States Kingdom • Banking system loans have grown at over 13% p.a. since 2000 • Despite the recent growth, lending as a share of GDP remains well behind the US / UK, and in
Slide 17: A platform for growth
A platform for growth September 2004 17
Slide 18: The Losango Acquisition
The Losango Acquisition • 1997-2003 period characterised by the implementation of controls, the development of a sales culture, and returning a broken bank to profitability. • The purchase of Losango in 2003 has extended HSBC Brazil’s platform for growth. • Losango brings: – A database of 15 million
Slide 19: The Importance of Retailers
The Importance of Retailers • Economic and credit growth will centre around increased consumer demand. The retailer segment must be a strategic focus • HSBC / Losango provides integrated services to the retailer universe: the stores themselves, their employees, their customers and their suppliers Se
Slide 20: PFS - Building Scale and Leveraging the Infrastructure
PFS - Building Scale and Leveraging the Infrastructure • Continue focus on relationship banking aimed at middle-income customer segments and above, supported by investments in the brand and service quality • Diversification of income base via expansion in fast-growing Cards and Auto-Finance markets
Slide 21: CMB / CIBM - Full integration with Consumer / PFS strategies
CMB / CIBM - Full integration with Consumer / PFS strategies • CIB resources dedicated to corporates with cross-sell potential (staff, customers) • Expansion of SME / MME regional and sectoral capabilities, targeting growth areas (including retailers) and changing customer needs • Product focus – Tr
Slide 22: Data Management
Data Management • Growth is dependent on enhanced coordination between customer groups and the ability to lend to new clients • Superior data management and credit scoring processes are key • HSBC / Losango combined already have information on 20% of the economically active population • We are inves
Slide 23: Successful so far...
Successful so far... PRODUCT Volume Y-O-Y JUN04 Growth • Auto Finance Lending (HSBC+Losango) * BRL2.0bn 58% * • Credit Cards in Force 1.58M 27% • Call Centre Monthly Product Sales 42,737 253% • Core Customer Deposits BRL 9.3bn 32% • Core SME / MME Lending BRL2.4bn 38% • Trade Finance Lending BRL1.3b
Slide 24: HSBC Differentiators
HSBC Differentiators • Capital strength and size: the HSBC Group is more than three times the size of Brazil´s ten biggest banks combined. • HSBC experience in emerging markets at all stages of development • A unique mix of global reach, nationwide footprint and full service offering – ‘The world´s
Slide 25: Managing for Growth in Brazil
Managing for Growth in Brazil