Hsbc Holdings Plc · LSE:HSBA
Hsbc — Investor Presentation (May 2007)
103 slides from Hsbc's investor presentation, May 23, 2007
Slide 1: Latin America – transforming opportunity
Latin America – transforming opportunity London 23 May 2007
Slide 2: HSBC in Latin America
HSBC in Latin America Sandy Flockhart President HSBC Latin America and the Caribbean Group Managing Director
Slide 3: Forward-looking statements
Latin America – transforming opportunity 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 (HGHQ). These forward-looking statements represent t
Slide 4: Agenda
Latin America – transforming opportunity Agenda Overview Latin America ..……………….……….……….……............…. Sandy Flockhart Personal Financial Services .....…………………………...………….………. Rafael Arana Commercial Banking …....…………………………......……....… Jose Manuel Dominguez Corporate, Investment Banking and Market
Slide 5: Latin America profit before tax rises to US$1.7bn
Latin America – transforming opportunity Latin America – profit before tax rises to US$1.7bn Latin America, profit before tax +8% • Latin America contributes 8% of Group PBT US$m • Strong growth of 25%(1) +25% 2,000 • Mexico profit exceeds US$1bn 1,800 1,735 1,604 • Integrated acquisition in Argenti
Slide 6: PBT by Country
Latin America – transforming opportunity Latin America PBT by Country Profit before tax Composition (US$m), 2006 Profit before tax 2006 vs. 2005 (%) Argentina, 157, 9% Panama, 39, Mexico +9 2% Other, 4, 0% Brazil, 526, Brazil* +30 +66* 30% Argentina* -36 +29* Panama +30 Mexico, 1,009, 59% Total Lati
Slide 7: Business mix
Latin America – transforming opportunity Latin America Business mix Profit before tax (US$ millions), 2006 Growth in profit before tax (%), 2006 – 2005 14 (1%) Personal Financial +2 +15 (1) Services 475 (27%) 800 (46%) Commercial Banking +26 US$1,735m Corporate, Investment +37 Banking and Markets 45
Slide 8: HSBC in Latin America in January 1997
Latin America – transforming opportunity HSBC in Latin America in January 1997 From 10 operational offices… Mexico 1 Rep office Panama 5 Branches Venezuela 1 Rep office Brazil 1 Rep office Chile Argentina 1 Rep office 1 Rep Office(1) 1.06
Slide 9: HSBC Geographic footprint: 2006
Latin America – transforming opportunity HSBC also has offices in the Bahamas, HSBC Geographic footprint: 2006 the British Virgin Islands and the Cayman Islands To 4,000 operational offices, in less than 10 years LAM now has more than 20% of HSBC’s employees with 67k in LAM Mexico Honduras HSBC Mexi
Slide 10: Our Structure – Latin American Regional Organisation
Latin America – transforming opportunity Our Structure – Latin American Regional Organisation CEO LATIN AMERICA CEO MEXICO HEAD OF INTERNATIONAL CEO BRAZIL CEO ARGENTINA CEO PANAMA CENTRAL AMERICA & COLOMBIA INTNL CENTRAL AMERICA CEOs CEO URUGUAY CEO PARAGUAY CEO VENEZUELA CEO PERU CEO CHILE The new
Slide 11: Growth in emerging market economies
Latin America – transforming opportunity Latin America: Growth in emerging market economies 10,400 2006 GDP (nominal) per capita (US$) /2 Chile Mexico 8,400 Costa Rica Venezuela 6,400 Brazil Uruguay Argentina 4,400 Peru Panama Colombia Guatemala 2,400 El Salvador Paraguay Honduras Nicaragua 400 0% 1
Slide 12: Latin America is an under-banked region
Latin America – transforming opportunity Latin America is an under-banked region Domestic credit of the Private Sector/GDP US 194% Canada 179% UK 163% Panama 98% Chile 70% El Salvador 43% Honduras 40% Costa Rica 36% Brazil 33% Latin America’s current low financial services penetration provides HSBC
Slide 13: Acquisition of Grupo Banistmo
Latin America – transforming opportunity Acquisition of Grupo Banistmo On 23 November 2006, HSBC acquired Grupo Banistmo, Central America’s leading financial services company for US$1.97 billion/1: • US$9.5bn in Assets • 253 Branches and 6,611 Headcount in 7 countries, and 1.3 million customers • Fu
Slide 14: Joining-up the region: IT roll-out
Latin America – transforming opportunity Joining-up the region: IT roll-out Current Regional Situation • 4,300 IT Staff • US$700m in annual IT spending - around 2 billion transactions per year • Each LAM country currently runs different core banking software • Group Systems running in Mexico, Brazil
Slide 15: Regional Strategy for Growth
Latin America – transforming opportunity Regional Strategy for Growth Formation of the region • Successful integration of Banistmo into HSBC’s operations • Leveraging synergies between LAM and the HSBC Group Organic growth • Build out of the Insurance business; leveraging growth across customer segm
Slide 16: Latin America: key points
Latin America – transforming opportunity Latin-America: key points • HSBC: a leading regional distribution network • Integrating our operations: regionally and globally • Long-term growth prospects for financial services 1.14
Slide 17: Personal Financial Services
Personal Financial Services Rafael Arana Garza Head, Personal Financial Services, Latin America
Slide 18: PFS Latin America profit before tax, 2006
Latin America – transforming opportunity – PFS Latin America profit before tax, 2006 Share of profit before tax by country • Profit before tax US$800m, up 15%1 • Contributes to 8.5% of global PFS PBT CAGR 11% Brazil Argentina US$m 15% 4% 900 Others 800 2% 786 800 891 700 651 697 600 500 400 300 200
Slide 19: Attractive, high growth but complex market
Latin America – transforming opportunity – PFS Attractive, high growth but complex market • Region with a GDP of US$2.6 trillion in 2006, similar to China and three times higher than India • Demographics, size and income distribution create a complex environment • All segments present in every count
Slide 20: Income Distribution: A great disparity
Latin America – transforming opportunity – PFS Income Distribution: A great disparity Brazil, 20011 Monthly household Distribution of economically active Approximate credit Current – account Outstanding Income, reals2 population by income, millions of people product penetration, % penetration, % loa
Slide 21: The challenge: brand awareness, distribution, cost, risk analytics
Latin America – transforming opportunity – PFS The challenge: brand awareness, distribution, cost, risk analytics, CRM and collections • Serve the different markets and segment with the right products, service model, distribution and cost Distribution: not a single model, but a full range of possibi
Slide 22: PFS strengths across the region and opportunities for growth
Latin America – transforming opportunity – PFS PFS strengths across the region and opportunities for growth Mexico Brazil Argentina Central America Characteristics • Approx 20% of branch • Sizeable branch and • Fast growing market • Consolidating and ATM infrastructure ATM network • Low banking pene
Slide 23: Customer segmentation
Latin America – transforming opportunity – PFS Customer segmentation: providing the right offer, the right price and the right service proposition to 30 million customers Premier Value proposition: A 30 million • Product customers CRM • Risk B, C Analytics • Price • Expected benefit C, D, E • Channe
Slide 24: Consumer Finance: managing risk, cost and alliances
Latin America – transforming opportunity – PFS Consumer Finance: managing risk, cost and alliances Market has grown 20% CAGR • Brazil, Mexico and Argentina in different stages of evolution • Losango leading the way and sharing knowledge, sophisticated credit risk collections model • Low cost infrast
Slide 25: Remittances: leveraging the Mexican experience
Latin America – transforming opportunity – PFS Remittances: leveraging the Mexican experience in a US$61bn market Remittance companies (traffic source)* Bancomer Remittance flows Asia-Pacific Transfer Eastern Europe US$m Services MEXICO HONDURAS 2.359 23.000 COSTA RICA Alliance 520 GUATEMALA PANAMA
Slide 26: Global Premier and Insurance
Latin America – transforming opportunity – PFS Global Premier: targeting the affluent segment • Launch Global Premier • International offshore services • Credit card loyalty and rewards around the world • Financial planning and wealth management • Capitalise on our branch network • 370k current Prem
Slide 27: PFS: key points
Latin America – transforming opportunity – PFS PFS: key points • Capitalise both mass consumer and affluent market opportunities How? Join-up the region through: • Clear customer segmentation, cross selling and sharing of best practices • Building scale in our platform through straight through proce
Slide 28: Commercial Banking
Commercial Banking José Manuel Domínguez Head, Commercial Banking, Latin America
Slide 29: CMB Latin America profit before tax, 2006
Image Latin America – transforming opportunity – CMB Placeholder Latin America profit before tax, 2006 • Profit before tax US$451m, up 26% • Contributes to 7.5% of global CMB PBT CAGR 41% 1,600 1,470 1,400 CAGR 19% 1,200 1,067 1,000 800 741 600 451 400 357 316 200 NOI* PBT 0 2004 2005 2006 *NOI – Ne
Slide 30: Improving efficiency and growth in loans and advances
Image Latin America – transforming opportunity – CMB Placeholder Improving efficiency… US$m • CMB Latin America continues to improve in cost efficiency: 1,600 1,400 • 2004 cost efficiency ratio: 60.5 1,200 • 2005 cost efficiency ratio: 58.2 1,000 800 • 2006 cost efficiency ratio: 55.9 600 400 Total
Slide 31: Profit before tax dominated by Mexican and Brazilian markets
Image Latin America – transforming opportunity – CMB Placeholder Profit before tax dominated by the Mexican and Brazilian markets Others 4% Argentina 11% Mexico 44% Brazil 41% 3.03
Slide 32: Developing the Global CMB strategy within Latin America
Image Latin America – transforming opportunity – CMB Placeholder Developing the Global CMB strategy within Latin America • Multi channel distribution strategy • Segmentation approach • Valuing difference and Vision: understanding aspirations To set the international standard for Commercial Banking B
Slide 33: CMB strengths across the region and opportunities for growth
Image Latin America – transforming opportunity – CMB Placeholder CMB strengths across the region and opportunities for growth Mexico Brazil Argentina Central America Characteristics • Highly competitive • National coverage • Fast growing market • Consolidating banking market place • Full product ran
Slide 34: Strategic focus – Leading International Business
Image Latin America – transforming opportunity – CMB Placeholder Strategic focus – Leading International Business • Join-up the region through International Business Centres in Mexico, Brazil & Argentina • Mexico IBC Æ Central America; Brazil IBC Æ Smaller South American Countries • On-site Coaching
Slide 35: Strategic focus – Best Small Business Bank
Image Latin America – transforming opportunity – CMB Placeholder Strategic focus – Best Small Business Bank • Capitalize on large and diverse small business markets across the region • Over half of the GDP in most Latin America countries • Continued implementation of mass SME segment products • “Est
Slide 36: Building scale with intra-regional and Asian trade flows
Image Latin America – transforming opportunity – CMB Placeholder Building scale for future growth with intra-regional… Latin America intra-regional trade flows, 2005: US$111bn* • HSBC has dedicated trade teams in: Argentina, Brazil, Chile, Mexico, Panama, Peru and Uruguay • Leverage Group expertise
Slide 37: Payments and Cash Management – a tremendous opportunity
Image Latin America – transforming opportunity – CMB Placeholder Payments and Cash Management – a tremendous opportunity • Well positioned to take advantage of regional cash management opportunities • Continued development and roll-out of services to Central America • Drive further client acquisitio
Slide 38: CMB: key points
Image Latin America – transforming opportunity – CMB Placeholder CMB: key points • Capitalise on commercial banking market opportunities How? Join-up the region through: • ‘Leading international bank’ and driving cross border opportunities: a ‘sticky’ business • ‘Best small business bank’ with direc
Slide 39: Corporate, Investment Banking and Markets – Latin America
Corporate, Investment Banking and Markets – Latin America John Flint Group Treasurer
Slide 40: Latin America contributes 8% of global CIBM profit before tax
Image Latin America – transforming opportunity – CIBM Placeholder Latin America contributes 8% of global CIBM profit before tax, primarily driven by the Mexican and Brazilian markets CIBM profit before tax – 2006 CIBM Latin America profit before tax – 2006 North America 7% Other LAM Latin America Eu
Slide 41: CIBM Latin America continues to deliver strong growth
Image Latin America – transforming opportunity – CIBM Placeholder CIBM Latin America continues to deliver strong year-on-year growth in both revenue and profit whilst maintaining positive “Jaws” US$m NOI CAGR 38% 1000 795 800 608 PBT CAGR 56% 600 475 415 347 400 196 200 0 2004 2005 2006 • CIBM Latin
Slide 42: Net operating income balanced across business lines
Image Latin America – transforming opportunity – CIBM Placeholder CIBM Latin America’s net operating income continues to be well balanced across business lines Net operating income – 2006 Global Markets Sales & Trading Balance Sheet Management Securities Services Payments & Cash Management Other Glo
Slide 43: Improving sovereign debt conditions and trade opportunities with Asia
Image Latin America – transforming opportunity – CIBM Placeholder Improving sovereign debt conditions and trade opportunities with Asia EMBI - Emerging Market Bond Index • Country Risk Factors (measured by EMBI) for Spread (bps) Brazil and Mexico have been declining over the past few years, making t
Slide 44: Replicating our Asian business model in Global Markets
Image Latin America – transforming opportunity – CIBM Placeholder In Global Markets, we are successfully replicating our Asian business model in Latin America • As illustrated by • …and origination • Significant potential upside exists FX market … share… No of Mandates Comparison of Sales and Market
Slide 45: Growing our business and gaining recognition in FX
Image Latin America – transforming opportunity – CIBM Placeholder We are successfully growing our business and gaining recognition in FX… Argentina Treasury Rankings Argentina – Market Share as of April 2007 Source: MAE Rank Entity FX Spot NDF • In Argentina as we have recently taken the 1 HSBC 16.4
Slide 46: …as well as capital markets
Image Latin America – transforming opportunity – CIBM Placeholder …as well as capital markets Mexico Mexican Debt League Tables – 2006 Rankings Source: Bloomberg Rank Underwriter 2006 Rank 2005 Rank 2004 Rank • In less than 2 years, our DCM business in Mexico has grown from a low base to top 3 in 1
Slide 47: Key market to develop transaction services businesses
Image Latin America – transforming opportunity – CIBM Placeholder Latin America is a key market to continue developing our transaction services businesses Payments & Cash Management (PCM) • HSBC Brazil has one of the largest branch networks in the country, and provides tailor made solutions to the B
Slide 48: Group Investment Businesses – progress and recognition
Image Latin America – transforming opportunity – CIBM Placeholder Group Investment Businesses – progress and recognition • Growing product range. Business includes • Our strong presence in Brazil has led us to mutual funds, retirement and insurance win several awards… • Progress is increasingly evid
Slide 49: Connectivity in action
Image Latin America – transforming opportunity – CIBM Placeholder Connectivity in action New York London Hong Kong Mexico City Panama City • Without a major global financial centre in Latin America, Connectivity and Collective Management are key aspects for success São Paulo • Leverage on our global
Slide 50: CIBM: key points
Image Latin America – transforming opportunity – CIBM Placeholder CIBM: key points We have leveraged the Group’s experience in Asia to successfully build out our capabilities in Latin America • We are now well established in key markets • We have a clear set of development priorities To be the leadi
Slide 51: Mexico
Mexico Paul Thurston Chief Executive Officer HSBC Mexico
Slide 52: Mexico Agenda
Latin America – transforming opportunity – Mexico Agenda • Market environment • Improving macroeconomics • Financial services market opportunities • HSBC in Mexico: Overview • Platform for growth • Growing into our infrastructure • Performance and Return on Investment in Mexico • Customer segment st
Slide 53: Market environment – Improving macroeconomics
Latin America – transforming opportunity – Mexico Market environment – Improving macroeconomics Economic conditions: • GDP growth: 4.8% in 2006, 2007 estimate 2.7% • Low inflation: 3.6% in 2006, less than 4% in 2007 • Possibility of the central bank tightening the overnight rate in the short term, w
Slide 54: Growth in financial services driven by demographics and demand
Latin America – transforming opportunity – Mexico Growth in financial services driven by demographics and demand A young population Age • Average age range 25-29 • Currently 45m Mexicans less than 91-95 Population in Year 2006* (millions) 20 years old 76-80 • Next 5 years Æ 11m potential new bank cu
Slide 55: HSBC Mexico has a strong platform for growth
Latin America – transforming opportunity – Mexico HSBC Mexico has a strong platform for growth Extensive branch and ATM Network Regionalisation • 1,347 branches (19% market share*) Four regions with full responsibility for • 5,437 ATMs (23% market share*) customer relationships • 23,700 staff of whi
Slide 56: Largest emerging market contributor to the Group
Latin America – transforming opportunity – Mexico HSBC Mexico is the largest emerging market contributor to the Group Profit before tax, US$ million 900 CAGR 14% 800 1,009 700 923 600 774 500 400 300 200 100 0 2004 2005 2006 5.05
Slide 57: Return On Investment – A successful acquisition
Latin America – transforming opportunity – Mexico Return On Investment* – A successful acquisition for HSBC in Mexico 739 686 524 (1,140) 393 25 (800) (144) (175) Acquisition Capital 2002 Profit Acquisition Acquisition 2003 Profit 2004 Profit 2005 Profit 2006 Profit Of GF Bital injection after tax 4
Slide 58: Retail businesses account for more than 80% of earnings
Latin America – transforming opportunity – Mexico Retail businesses account for more than 80% of earnings HSBC Mexico – Profit before tax by customer segment 2006 GPB 1% CMB 20% CIBM PFS 18% 61% 5.07
Slide 59: Personal banking strategy
Latin America – transforming opportunity – Mexico Personal banking strategy Investing for organic growth in key segments of the market • Building scale in our credit card and personal loans portfolios • Building out the value of customer base: • Leveraging our CRM capability to drive cross sales • E
Slide 60: Steady expansion of the deposit base
Latin America – transforming opportunity – Mexico Steady expansion of the deposit base • Gaining market share each year • HSBC has the lowest cost of funds in the market Market Share* 13.03% 13.84% 14.39% 15.88% 16.23% CAGR 15% MXN bn 200 Average Balance 150 100 50 2002 2003 2004 2005 2006 * Source:
Slide 61: Tu Cuenta – The first integrated financial services package
Latin America – transforming opportunity – Mexico Tu Cuenta – The first integrated financial services package of its kind Episode I • Checking Account • Debit Card 1,200,000 91% of customers 1,005,000 • Phone Bank Services are new to HSBC • Internet Bank Services 1,000,000 Number of Openings 795,000
Slide 62: Investment in Card Receivables
Latin America – transforming opportunity – Mexico Investment in Card Receivables • In 2006, credit cards receivables grew by 117%, gaining over 200 bps in market share versus prior year Market Share* 6.61% 4.96% 4.43% 5.03% 7.17% MXN bn CAGR 49% 16 Total Balance 14 12 10 8 6 4 2 - 2002 2003 2004 200
Slide 63: Building PFS customers and revenues
Latin America – transforming opportunity – Mexico Building PFS customers and revenues • We have added more than two million new personal customers in the last three years • PFS revenues have grown at a CAGR of 20% • We are re-positioning the balance sheet, with more credit card and unsecured loans •
Slide 64: Commercial Banking strategy
Latin America – transforming opportunity – Mexico Commercial Banking strategy Best Small Business Bank in Mexico • Bundled products, Estímulo and Estímulo Empresarial • Development of the SME model with PFS • SME award from the Ministry of the Economy for the second consecutive year in 2006 Segmente
Slide 65: Commercial Banking: Segmentation and specialisation
Latin America – transforming opportunity – Mexico Commercial Banking: Segmentation and specialisation Segmentation Specialisation Differentiated approach Differentiated approach according to customer size according to sector and needs Customer segments (US$ sales turnover) LE Government Greater than
Slide 66: Corporate, Investment Banking and Markets strategy
Latin America – transforming opportunity – Mexico Corporate, Investment Banking and Markets strategy Building local capabilities and leveraging the Group’s unique footprint • Support Mexican corporates and Mexican institutions with global aspirations and global multinationals with a Mexican presence
Slide 67: Mexico: key points
Latin America – transforming opportunity – Mexico Mexico: key points • Mexico is a fast growing financial • And in increasing cross sales/share services market of wallet to add value from our • HSBC has made a successful acquisition customer base and has a platform for growth • We are growing our in
Slide 68: Brazil
Brazil Emilson Alonso President and Chief Executive Officer, Brazil
Slide 69: Brazil Agenda
Latin America – transforming opportunity – Brazil Agenda • Economic Overview • Recent Performance • Outlook for 2007 • HSBC Brazil Overview • Financial • Contribution • Strategic Plan • Customers • Presence • Main Business Performance and Strategic Drivers • PFS, Insurance and Consumer Finance • CMB
Slide 70: Economic overview
Latin America – transforming opportunity – Brazil Economic overview Recent Performance • Low average growth rates coupled with high volatility have marked Brazilian GDP in recent years: 29% in 2006 vs 2.3% in 2005 • High and volatile annual interest rates: 13.25% in 2006 vs 17.25% in 2005 • Decline
Slide 71: Profit before tax; loans and advances
Latin America – transforming opportunity – Brazil Profit before tax; loans and advances • Strong Performance in PBT through organic growth • Loans and Advances to customers reached US$ 9.5bn Profit Before Tax (US$m) Average Loans and Advances to Customers (US$bn) CAGR 37% CAGR 41% 600 10 9.5 526 500
Slide 72: Business mix
Latin America – transforming opportunity – Brazil Business mix Profit Before Tax (US$m), 2006 Growth in profit before tax (%), 2005 – 2006 6 (1%) Personal Financial Services 55* 121 (23%) Commercial Banking 26 218 (41%) Corporate, Investment Banking 129 and Markets Private Banking 500 Total Brazil 6
Slide 73: Brazil branch network and rankings
Latin America – transforming opportunity – Brazil Total Brazil Centre-North Branches: 934 Branches: 150 ATMs: 5.833 ATMs: 919 Mini-branches (PABs): 177 Mini-branches (PABs): 967 Losango branches: 45 Losango branches: 293 East-Northeast Branches: 233 ATMs: 1.493 Mini-branches (PABs):157 Losango branc
Slide 74: The best retail bank for retailers
Latin America – transforming opportunity – Brazil ‘The best retail bank for retailers’ Joining-up • Business growth driven by relationship and experience with retailers, providing: • Consumer Finance, CMB, and CIBM services • Strong focus on cross-referral opportunities for PFS, Private Banking, and
Slide 75: Business and Personal customers
Latin America – transforming opportunity – Brazil Business Personal (329k customers) (2.7m customers) Corporate* 0.6 Private 1k MME/LLC 10k Premier 135k SME Upper 17k Gold 302k SME 198k Super Class 1,720k Micros 104k Global 581k Business 20.5k Personal 19.3m Data-Base Dec06 *Groups 6.07
Slide 76: PFS – profit before tax and loans portfolio
Latin America – transforming opportunity – Brazil PFS – profit before tax and loans portfolio • Fee income rose by 25%, largely from increased current account fees, reflecting growth in customer numbers • Net interest income rose by 9% • Average loans balances were 18% higher, driving by rising cust
Slide 77: PFS – assets and channels
Latin America – transforming opportunity – Brazil PFS – assets and channels Secured loans vs Unsecured loans Direct channels – Products sold portion 100% 15% 19% 80% 49 43 41 60% 38% 46% 40% 51 57 59 20% 47% 35% 0% 2004 2005 2006 2005 2006 Secured Unsecured ATM Phone Internet • Customer Assets grow
Slide 78: PFS – assets and channels
Latin America – transforming opportunity – Brazil PFS – assets and channels • Focus on direct channels to increase participation • Grow auto finance business to reach USD 2.5bn assets portfolio • Focus on Payroll loans and instalment loans • Leverage wealth management offering through remodelled Pre
Slide 79: Consumer Finance – key strategic drivers
Latin America – transforming opportunity – Brazil Consumer Finance – key strategic drivers • Losango: position our consumer finance business with a multi-product and multi-channel proposition • Focus on customers in the lower mass market income segment – upsell and cross-sell within HSBC’s mainstrea
Slide 80: Insurance – key strategic drivers
Latin America – transforming opportunity – Brazil Insurance – key strategic drivers • Manufacturing and ‘Bancassurance’ distribution • Brokerage (through HSBC Broker) • Fully utilise the synergies with the bank where the risk is not underwritten by HSBC (especially P&C products) • Manufacturing • Lo
Slide 81: CMB – profit before tax and loans portfolio
Latin America – transforming opportunity – Brazil CMB – profit before tax and loans portfolio • Lending Balances rose by 16% primarily driven by small and middle market customers • Net interest income was 12% higher than 2005 • Fee income rose by 47% as effective cross-selling led to an increase in
Slide 82: CMB – key strategic drivers
Latin America – transforming opportunity – Brazil CMB – key strategic drivers • Be the best Retail banker for Retailers • Leverage on existing relationships – and their supply chain • Increase direct channel penetration • Cross sell into other business lines – PFS (payroll), insurance and investment
Slide 83: CIBM – profit before tax
Latin America – transforming opportunity – Brazil CIBM – profit before tax • Improvement in market positioning (2006 Panel Industry Survey) • Increase use of balance sheet – leveraging ancillary business • Higher revenues from trading activities flowed from marketing the wider product range and enha
Slide 84: CIBM – key strategic drivers
Latin America – transforming opportunity – Brazil CIBM – key strategic drivers • Leverage on existing relationships • Increase use of balance sheet leveraging ancillary business • Focus on supply chain concept • Increase cross sales and penetration in customer base • Align relationships with Investm
Slide 85: Private Banking – profit before tax
Latin America – transforming opportunity – Brazil Private Banking – profit before tax • Revenue and cost benefits arose from initiatives to join up the business, including cross referrals from PFS and CMB Key strategic drivers • 3rd Best Private Bank in Brazil¹ • Cross-referrals: 60% of all new rela
Slide 86: Brazil: key points
Latin America – transforming opportunity – Brazil Brazil: key points • Improving and stable economy – low inflation and lower interest rates – accelerating economic growth • Increased requirement for financial services and opportunities in all segments • The Bank shows positive trends in PBT and ass
Slide 87: Argentina
Argentina Antonio Losada Chief Executive Officer HSBC Argentina
Slide 88: Argentina Agenda
Image Latin America – transforming opportunity – Argentina Placeholder Agenda • Macro-economy • Financial system • HSBC Argentina’s position as a financial services group • Strategy 7.01
Slide 89: Argentina's macro-economic fundamentals have improved
Image Latin America – transforming opportunity – Argentina Placeholder Argentina’s macro-economic fundamentals have improved • Increased financial strength • Very competitive real exchange rate • ‘Twin surpluses’ (Fiscal and Current Account) and high reserves levels (USD 37B) • Improved Debt Profile
Slide 90: Financial system recovered, showing growth potential
Image Latin America – transforming opportunity – Argentina Placeholder Financial system recovered, showing growth potential • Banks are profitable again • Ample room for growth • Loans/GDP in Chile – 70%; Brazil – 33%; Mexico – 16%, Argentina – 11% • Low Bancarization levels • Non-performing loan ra
Slide 91: A full-suite of financial products and services
Image Latin America – transforming opportunity – Argentina Placeholder We offer a full-suite of financial products and services BANK P&C INSURANCE LIFE AND PENSIONS* ANNUITIES* Offering Full-suite of Banking Retail and Individual and Group Pensions and products and services Commercial Life and Annui
Slide 92: Profitable franchise, with improving earnings quality
Image Latin America – transforming opportunity – Argentina Placeholder Profitable franchise, with improving earnings quality Profit before tax* US$m 300 244 157 154 150 Crisis Loss Recoveries* Recurring 2004 2005 2006 *Crisis Loss Recoveries: positive impact from Government Compensation Bonds, recov
Slide 93: Group earnings are diversified
Image Latin America – transforming opportunity – Argentina Placeholder Group earnings are diversified... HSBC Argentina – Profit before tax by customer group 2006 Others 2% CMB 32% CIBM 43% PFS 23% 7.06
Slide 94: Loans balanced across customer groups
Image Latin America – transforming opportunity – Argentina Placeholder ...and HSBC Argentina loans are balanced across customer groups HSBC Argentina – Loans and Advances to Private Sector Customers 2006 (% ) CMB CIBM 38% 31% PFS 31% 7.07
Slide 95: BNL's acquisition: scale, customers and distribution
Image Latin America – transforming opportunity – Argentina Placeholder BNL’s acquisition: scale, customers and distribution PFS Customers CMB Customers Branch network Thousands Thousands Number of branches 1200 58 148 +675 +23 +90 35 525 58 Market Share – Market Share – Loans and Deposits* Credit Ca
Slide 96: Leading Insurance business in Argentina
Image Latin America – transforming opportunity – Argentina Placeholder HSBC has a leading Insurance business in Argentina • HSBC manufactures and distributes P&C, Life and Annuities, and Pension • Leading market positions (#1 in Life and Annuities, #4 in P&C, #5 in Pension FUMs) • Primarily focused
Slide 97: Our Strategy aims at Growth with Quality
Image Latin America – transforming opportunity – Argentina Placeholder Our Strategy aims at Growth with Quality... • Increase PFS sales in Premier and Gold Focus primarily on PFS and (affluent and mass affluent) CMB Growth with Quality… • Launch cross-sell, activation and utilization campaigns in ex
Slide 98: Leveraging our strengths in products, services and distribution
Image Latin America – transforming opportunity – Argentina Placeholder ...leveraging our strengths in products, services and distribution... • Treasury: #1 in FX Spot and NDF, referent in Bonds ...taking advantage of our • Trade Services: leading positions in imports and exports strengths in product
Slide 99: Focusing on risk management and efficiency
Image Latin America – transforming opportunity – Argentina Placeholder ...and focusing on risk management and efficiency • Manage a primarily retail (short-tenor) focused business ...while following prudent • Allow minimal structural balance-sheet mismatches risk management practices... • Attain con
Slide 100: Argentina: key points
Image Latin America – transforming opportunity – Argentina Placeholder Argentina: key points HSBC Argentina can be an important growth contributor • Growing economy, with improved fundamentals • Financial Services industry recovered and growing • HSBC well positioned as a leading franchise in Argent
Slide 101: Closing Remarks
Closing Remarks Sandy Flockhart President HSBC Latin America and the Caribbean Group Managing Director
Slide 102: HSBC Latin America closing remarks
Latin America – transforming opportunity – closing remarks HSBC Latin America is: A leading regional distribution network Working at integrating our operations An opportunity for long-term growth prospects 8.01
Slide 103: HSBC
HSBC