Hsbc Holdings Plc · LSE:HSBA
Hsbc — FY2002 Earnings Presentation
33 slides from Hsbc's earnings presentation, Mar 4, 2003
Slide 1: HSBC Holdings plc 2002 Results
HSBC Holdings ple 2002 Results
Slide 2: Forward-looking statements and Household proxy notice
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 kno
Slide 3: 2002 results
2002 results US$m %ch US$m %ch Operating profit before provisions 11,641 +3 10,787 +3 Pre-tax profit 10,513 +19 9,650 +21 Attributable profit 7,102 +22 6,239 +25 Earnings per share (US$) 0.76 +21 0.67 +24 Dividend per share (US$) 53.0 +10 Tier 1 ratio (%) 9.0% 2002 Results 3
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Slide 5: Key achievements
Key achievements In a mixed and challenging environment > Developed our core businesses Invested in the operating infrastructure Maintained stable credit quality Extended the global footprint of the Group Strengthened the HSBC brand
Slide 6: Line of business analysis
Line of business analysis Operating Profit before Provisions* 2002 2001 US$m %oftotal US$m %oftotal %ch Personal Financial Services 4,431 38% 4,092 36% +8 Commercial Banking 3,212 28% 2,988 27% Corporate, Investment Banking & Markets 3,632 31% 33% Private Banking 4% 4% Other 1% 0% 100% 100% * cash b
Slide 7: Personal Financial Services
Personal Financial Services* US$m 2002 2001 Income 11,404 10,569 Costs 6,973 6,477 Operating Profit 4,431 4,092 Cost/Income ratio 61.1% 61.3% * cash basis Highlights. > GRMSrolled out into 30 countries from 22 at end 2001 > Developing delivery channels > E-banking extended from 3.0m to 4.3m > Increa
Slide 8: Commercial Banking
Commercial Banking* US$m 2002 2001 Income 6,365 6,104 Costs 3,153 3,116 Operating Profit 3,212 2,988 Gost/Income ratio 49.5% 51.0% * cash basis Highlights. > HSBG's competitive position in the UK was reflected in a 7% growth in the customer base Business Internet Banking successfully launched in 6 c
Slide 9: Corporate, Investment Banking & Markets
Corporate, Investment Banking & Markets* US$m 2002 2001 % ch Income 7,533 7,676 -2 Costs 3,901 3,920 ty) Operating Profit 3,632 3,756 -3 Cost/Income ratio 51.8% 51.1% mcash basis, Highlights. Completed integration of CIB and|IBM with more client focused structure Forefront of corporate origination (
Slide 10: Private Banking
Private Banking* US$m 2002 2001 Income 1,420 1,394 Costs 987 919 Operating Profit 433 475 Cost/Income ratio 695% 65:9% * cash basis Highlights > Period of restructuring and reorganisation > FUM increased by 11% to US$144 billion 2002 Results 10
Slide 11: Operating profit pre-provision
Operating profit pre-provision* Geographical contribution - 2002 Geographical contribution - 2001 4.0% = Europe 1.6% 13.4% = Hong Kong 10.8% = Rest of Asia Pacific @ North America South America US$11,641m US$11,283m, 1 1 Europe Hong Kong Rest of Asia Pacific North America Group *cash basis % change
Slide 12: Operating margin
Operating margin (Operating profit before provisions, excluding goodwill amortisation as % of average risk-weighted assets) Bad debt charge (Bad debt charge as % of average risk-weighted assets) 0.5 0+ T T T T T T T T 1 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2002 Results
Slide 13: Loan growth
Loan growth* = Residential 2002 - Loan Mix 2001 - Loan Mix mortgages aa 119% = HK Govt home ownership scheme = Other personal lending = Commercial lending Financials US$352.2bn US$334.5bn Residential mortgages | HK Govt home ownership scheme Other personal lending Commercial lending Financials Group
Slide 14: Dealing profits
Dealing profits Other, DP ‘% of Revenue Fi FFX DP % Revenues 1996 1997 1998 1999 2000 2001 2002
Slide 15: Market risk-related revenues
Market risk-related revenues Daily distribution of Market Risk Revenues Group Treasury Centres Average revenue per day: 2002, US$14.6m 2001, US$13.9m
Slide 16: Operating cost 2002
Operating cost 2002* Operating hsbe.com Merrill Lynch Group ‘Underlying Operating cost 2001 processing cost growth cost for 2002 centres * cash basis 2002 Results 16
Slide 17: Operating cost 2H02
Operating cost 2H02* Operating MerrillLynch Underlying Operating cost 1H02 costgrowth cost 2H02 * cash basis 2002 Results 7
Slide 18: Credit quality - Bad & doubtful debts charge
Credit quality - Bad & doubtful debts charge 2002 2001 2002 Fh 2001 US$m As a % of average Specific Provisions advances New- Group ex Argentina 2,495 2,447 0.72 0.79 - Argentina 183 119 0.06 0.03 2,678 2,566 0.78 0:82 Releases and/recoveries - Group ex Argentina (993) (ly) (0:29) (0:35) - Argentina
Slide 19: Credit Quality - Bad & doubtful debts charge by line of business
Credit Quality - Bad & doubtful debts charge - Line of business a ee US$m Asa% US$m Asa% of advances of advances Personal Financial Services 857 0.60 767 0.67, Commercial Banking 0:30 662 0:81 Corporate, Investment Banking & Markets 0:18 34 0:03 Private Banking 0:04 (¢25) (0:20) 0.38 1,439 0:47 Othe
Slide 20: Argentina
Argentina US$m Total Assets Customer lending (ex Government) Provisions Bad debt charge Provisions/customer lending (%) Bad debt charge/customer lending (%) 2002 Results 20
Slide 21: Brazil
Brazil US$m 2002 Total Assets 7,073 Gustomer lending (ex Government) 2,347 Provisions 143 Bad debt charge 139 Provisions/customer, lending (%) 6.1% Bad debt charge/customer lending (%) 5.9% 2002 Results 21 2001 9,875 2,957, 209 182 7.1% 6.2%
Slide 22: Operating in a deflationary environment in Hong Kong
Operating in a deflationary environment in Hong Kong US$m % change cagr 1998 - 2002 Income 4.6 Costs 3.7 Operating Profit 5.2 Customer advances 1.0 CPI Inflation Nominal GDP * Index change per annum 1998 - 2002 2002 Results 22
Slide 23: Pension Funding
Pension Funding > Investment income covers 90% of pension payments > £500m injected into scheme 2002 Results
Slide 24: Investing in the business
Investing in the business > IT spend at US$2.5 billion ¢ CRMS deployment e Internet delivery e Group's Retail Processing System roll-out ¢ Consolidation and|standardisation of data centres > “The world’s local|\bank” brand statement, launched in March 2002, well received > Group Service Centres 2002
Slide 25: Group Service Centres
Group Service Centres Costs US$m DD S S o a C) = © b= c 2 (%) 9 8 7 6 5 A 3 2 1 0 2001 2002 2003 2001 2002 2003 2002 Results
Slide 26: Extending the global footprint
Extending the global footprint > Acquisitions completed: Ping An and Bital > Agreed acquisition of Household will substantially rebalance the Group
Slide 27: Growth opportunities for Bital
Growth opportunities for Bital Bital in Mexico Growth Opportunities > 8% share of performing > High growth in consumer. loans credit 12% share of MXP deposits Introduce Premier with low cost of funds Leverage global|corporate 5.7m Deposit accounts accounts Using local infrastructure Nation-wide cove
Slide 28: Household synergies
les ing synergi Fund w a o o rom o = wn a o = o a = ® 2 Oo = o ® > irs) Household sjulod'siseq % 002 Results 28
Slide 29: Household - Cost synergies
Household - Cost synergies > Credit card platform > Consolidation of Ij systems > Purchasing economies
Slide 30: Outlook
Outlook > Some uncertain economic and political conditions > Strategically well positioned ¢ For geographic and demographic opportunities e Adding asset generating capacity with Household © Financial strength 2002 Results 30
Slide 31: Growth opportunities
Growth opportunities GDP per capita (US$) US 35,778 UK 25,562 France 25,795 Hong Kong 22,959 Brazil 2,973 Mexico 6,072 China 902 Middle East 2,120 2002 Results 31
Slide 32: Outlook
Outlook > Some uncertain economic and political conditions > Strategically well positioned © For geographic and demographic opportunities e Adding asset generating capacity with Household © Financial strength 2002 Results 32
Slide 33: Final Transcript: Preliminary 2002 Earnings Conference Call
FINAL TRANSCRIPT HBC – Preliminary 2002 HSBC Holdings plc Earnings Conference Call CORPORATE PARTICIPANTS John R. Bond HSBC Holdings Plc – Chairman of the Board Douglas Flint HSBC Holdings Plc – Group Finance Director William R. Dalton HSBC Holdings Plc – Executive Director CONFERENCE CALL PARTICIPA