HSBC Chairman updates shareholders on 2005 performance

27 May 2005

HSBC Chairman Sir John Bond said today that the Group’s results for the first quarter of 2005 are in line with expectations.

Speaking at HSBC’s Annual General Meeting in London today, Bond highlighted HSBC's progress over the past six years. Since 1999, it has outperformed most of its peers; its share price has risen by 62 per cent, compared to a decline of 18 per cent in the total value of the FTSE 100.

Bond went on to identify future opportunities for growth, predicting three major influences on the global financial services industry over the next 25 years; a rebalancing of the global economy - with so-called emerging markets contributing a higher proportion of the world’s total GNP; changing demographic trends and technological improvements.  He told shareholders that the world’s second largest bank is in ‘good shape’ to respond to these ‘profound influences’.

Reviewing the progress of HSBC’s major global operations, Bond gave an outline of the success of HSBC’s acquisition of Household International and this year’s integration with the Group’s North American operation under the name ‘HSBC Finance Corporation’. “The benefits have been somewhat greater than we expected,” he said, referring to HSBC Finance Corporation’s record profit attributable to shareholders in 2004 of US$2.7billion. The acquisition has also moved HSBC from 40th to one of the top six issuers of credit cards in the world and to number three in store cards. Former HSBC Finance Corporation head, William Aldinger, retired at the end of April after the integration process was completed.

HSBC’s Corporate, Investment Banking and Markets (CIBM) operation was also under the spotlight at the AGM. Currently in the third year of a five-year strategic repositioning, Bond is confident that the business will deliver substantial income for the Group. “We believe that the demand for the sophisticated services which our CIBM business offers will grow rapidly outside the established centres of London, New York and Hong Kong and in markets such as mainland China, India and South America,” he said.

HSBC’s shareholders also received an introduction to the bank’s latest Corporate Social Responsibility initiative – its freshwater infrastructure guideline today. The guideline sets out the transactions that HSBC will and will not support, and ensures that its activities in the sector are consistent with its focus on the environment. It is the second such lending directive published by HSBC - in 2004, it launched its forest sector guideline - and it follows a host of further initiatives launched in the past few months designed to help HSBC reduce the social and environmental impacts of its operations.

Sir John Bond concluded his update at the AGM with a look at the established developed markets. With trends in employment and payroll data suggesting sustained economic momentum in the US and strong trade, retailing and tourism in Hong Kong,  HSBC Group’s progress has been broadly favourable. Bond added that the ‘well diversified’ nature of the bank’s business made it an ‘excellent investment proposition’. “Although the world economy is growing more slowly than in 2004, we see significant scope for HSBC to build its business,” he concluded.

“We are pursuing our strategy for Managing for Growth and in an increasingly open world, there are exciting prospects for the world’s local bank.”

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