Hsbc Holdings Plc · LSE:HSBA
Hsbc — Investor Day (November 2003)
27 slides from Hsbc's investor day presentation, Nov 27, 2003
Slide 1: Strategic Overview
HSBC Holdings plc The _world’s‘local.bank Strategic Overview HSBC 0®
Slide 2: Forward-looking statements
Forward-looking Forward-looking statements statements This This presentation presentation and and subsequent subsequent discussion discussion may may contain contain certain certain forward-looking forward-looking statements statements with with respect respect to to the the financial financial cond
Slide 3: Strategic overview
Strategic overview Managing for Value Managing for Growth 1998 - 2003 2004 - 2008 Strategic thinking Operating strategy 3 Investor Day - 27 November 2003 =>? =>
Slide 4: Fundamental strategic thinking
Fundamental strategic thinking ➣ A bank is a ‘leveraged’ play on the underlying economy, therefore the key challenge is to: • Select the better performing economies • Attract the most valuable clients in our chosen economies ➣ HSBC aims to produce a blend of earnings from: • Developed mature-growth
Slide 5: Fundamental operating strategy
Fundamental operating strategy ➣ Customer-driven — stay close to our customers ➣ International teamwork ➣ Strong capital and financial position ➣ Conservative, sound risk management ➣ Disciplined expense control ➣ Ethical behaviour, observing the letter and the spirit of rules and regulations 5 Inve
Slide 6: HSBC's 'Broadbrush' 25-year scenario
HSBC’s ‘Broadbrush’ 25-year scenario ➣ Key economic areas will be: • NAFTA led by USA • China ➣ 50% of the increase in world demand will come from developing countries: • China, India, Mexico and Brazil ➣ Major opportunities within the diaspora of: • Chinese, Hispanic, Indian and many other expatria
Slide 7: Performance in current strategic plan: economic background
Performance in current strategic plan Economic background ➣ HSBC specific • Asian crisis − NPL’s 9.4% of advances in Rest of Asia, end 1998 • 5 year deflation in core market of Hong Kong − Mortgage pricing from Prime +0.75% to Prime -1.74% − Residential property price decline of 34% • Argentina cris
Slide 8: Performance in current strategic plan: HSBC's performance
Performance in current strategic plan HSBC’s performance Total Shareholder Return (Shareholders Basis) 230% 230% 220% 220% 210% 210% 200% 200% 190% 190% 180% 180% 170% 170% 160% 160% 150% 150% 140% 140% 130% 130% 120% 120% 110% 110% 100% 100% 90% 90% 80% 80% Dec-98 Aug-99 M ar-00 Oct-00 Jun-01 Jan-0
Slide 9: Performance in current strategic plan: key milestones
Performance in current strategic plan Key milestones 31/12/98 30/06/03 ➣ Europe 44%, HK 37% and NAFTA ➣ NAFTA accounts for 27%, HK 27%, 15% of pre tax profit Europe 35% of pre tax profits ➣ 13 million customers ➣ 100 million customers ➣ Negligible internet customers ➣ 10.9 million internet customers
Slide 10: Positioning of HSBC
Positioning of HSBC Investing in countries of future consumer demand ➣ China: US$663m invested in • 10% of Ping An Insurance • 8% of Bank of Shanghai ➣ Mexico: US$2bn on acquisition of GF Bital ➣ Brazil: US$815m on acquisition of Lloyds TSB assets in Brazil Investor Day - 27 November 2003 10 =>? =>
Slide 11: Performance in current strategic plan: benchmarking 1999-1H03
Performance in current strategic plan Benchmarking 1999 - 1H03* Self assessment ➣ Credit record 84bp average charge ✔✔✔ ➣ Income added US$116.6bn ✔ ➣ Cost added US$63.9bn ✔ ➣ Cost / income ratio 53.9% to 51.3% ✔✔ ➣ EPS (cash) growth, 1998 - 2002 54c to 76c ✔✔ * Cash basis Investor Day - 27 November
Slide 12: We have a substantial potential for organic growth
We have a substantial potential for organic growth ➣ We see exciting opportunities in all of our customer groups • Personal Financial Services 38m • Consumer Finance 59m • Commercial Banking 2m • Corporate, Investment Banking & Markets 1400 • Private Banking 100k Investor Day - 27 November 2003 12 =
Slide 13: Managing for growth
Managing for growth 1. We have a strategy for growth 2. We will deliver this by • Focusing on enhancing HSBC’s revenue generation culture • Further developing the brand • Managing costs strategically • Maintaining a prudent credit/market risk stance • Investing further in our people 3. Acquisitions
Slide 14: 1. Strategy for Growth
1. Strategy for Growth ➣ Customers remain at the heart of our strategy therefore we have a specific strategy for each of our 5 worldwide customer groups ➣ Our position as the world’s local bank enables us to approach each country uniquely, blending local knowledge with a world- wide operating platfo
Slide 15: Our strategy is focused on Customer Groups
Our strategy is focused on Customer Groups Personal PersonalFinancial FinancialServices Services (PFS) (PFS) • • Including IncludingHSBC HSBCPremier Premier Corporate, Corporate,Investment InvestmentBanking Banking • • Director: Bill Dalton Director: Bill Dalton and Markets (CIBM) and Markets (CIBM)
Slide 16: There will be key regional axes of management
There will be key regional axes of management UK / Eurozone North America / NAFTA Asia-Pacific Middle East South America Investor Day - 27 November 2003 16 =>? =>
Slide 17: We will continue to enhance certain products core to our customer group offering
We will continue to enhance certain products which are core to our customer group offering ➣ Some products will be managed or co-ordinated globally, particularly • Cards - exploiting the experience and platforms provided by Household • Cash Management - scale and international reach • Insurance Incl
Slide 18: Our customer proposition will be calibrated along a spectrum
Our customer proposition will be calibrated along a spectrum... ➣ Strategic advisory relationship • CIBM, GPB ➣ Enhance personalised banking • Premier International ➣ Monoline (especially in cards) • Scale + focus = efficiency • Effective in both mature and emerging markets • Can be run in parallel
Slide 19: Enhancing HSBC's revenue generation culture
2. We will deliver growth by… … enhancing HSBC’s revenue generation culture This involves ➣ Strengthening the use of marketing as a key management tool of the business lines ➣ Rewarding revenue performance and penalising mediocrity ➣ Focusing investment on businesses and geographies with largest gro
Slide 20: Further developing the brand
… Further developing the brand ➣ The brand has been an outstanding success and we will continue with the next phase ➣ The brand is now sufficiently strong that we can accommodate brand variety at customer, product and even country level as and when required by the business model ➣ Reputation is the
Slide 21: Managing costs strategically
… Managing costs strategically in order to achieve maximum efficiency and flexibility ➣ Strategic necessity to have strong efficiency ratios ➣ Customer Groups will have more accountability for IT and other resource allocation ➣ Global resourcing and processing will become more and more important ➣ D
Slide 22: Managing costs strategically: global resourcing and processing
… Managing costs strategically in order to achieve maximum efficiency and flexibility Global resourcing and processing will be an essential element of our business Global Resourcing Processing Reviews ➣ We have an expanding pool of ➣ New technology for global resources Straight-Through • IT Developm
Slide 23: Maintaining a prudent credit / market risk stance
… Maintaining a prudent credit / market risk stance ➣ Our independent credit function has an excellent track record in a testing environment ➣ Our approach to credit for corporate and institutional clients will remain relatively conservative ➣ Credit for SME’s and personal customers will continue to
Slide 24: Investing further in our people
… Investing further in our people The substantially increased size of the Group means that it is imperative to invest fully in our people ➣ The management of Group talent is at the heart of the Group’s competitive advantage and needs to be strengthened ➣ Graduate recruitment will remain central to t
Slide 25: Acquisitions remain an integral part of our strategy
3. Acquisitions remain an integral part of our strategy ➣ These is no need for a transformational acquisition but opportunities for incremental acquisitions which extend our customer base or provide key product capabilities will be considered e.g • The Mexican AFORE • Lloyds TSB Brazilian assets • B
Slide 26: The criteria for selecting acquisitions should remain the same
The criteria for selecting acquisitions should remain the same ➣ Acquisitions must fit into our overall business strategy ➣ They must be Earning per Share accretive in the first full year and to exceed the Group’s cost of capital within an acceptable time frame (3 - 4 years) ➣ They should bring a va
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