Grupo Financiero HSBC, S.A. de C.V. first quarter 2007 financial results - highlights

30 April 2007

On 8 August 2006, HSBC Panama was sold by Grupo Financiero HSBC, S.A. de C.V. to HSBC Asia Holdings BV. All comparative commentary within this report is therefore on a like-for-like basis excluding HSBC Panama, as presented in Appendix A. The financial statements on pages 5-12 include HSBC Panama up until the date of disposal.

• Net income down 3.6 per cent to MXN1,376 million for the first quarter of 2007 (MXN1,428 million for the first quarter of 2006).
• Net loans and advances to customers up MXN25.7 billion, or 19.3 per cent, to MXN158.9 billion at 31 March 2007 (MXN133.2 billion at 31 March 2006).
• Total assets up MXN29.5 billion, or 10.6 per cent, to MXN309.0 billion at 31 March 2007 (MXN279.5 billion at 31 March 2006).
• Cost efficiency ratio (excluding monetary position) of 59.8 per cent for the first quarter of 2007 (61.8 per cent for the first quarter of 2006).
• Return on equity of 16.5 per cent for the first quarter of 2007 (21.8 per cent for the first quarter of 2006).

HSBC Mexico S.A. (the bank) is Grupo Financiero HSBC, S.A. de C.V.'s (the group) primary subsidiary, and is subject to supervision by the Mexican Banking and Securities Commission. The bank is required to file periodic financial information on a quarterly basis (in this case for the quarter ended 31 March 2007) and this information is publicly available. Given that this information is available in the public domain, Grupo Financiero HSBC, S.A. de C.V. has elected to file this release.

Results are prepared in accordance with Mexican GAAP (generally accepted accounting principles), with figures denominated in Mexican pesos (MXN). Comparative figures are presented on an actual basis, indexed to constant MXN as at 31 March 2007.

Grupo Financiero HSBC, S.A. de C.V. is a 99.99 per cent directly owned subsidiary of HSBC Holdings plc (HSBC).

Commentary by Paul Thurston, CEO of Grupo Financiero HSBC Mexico:

"Grupo Financiero HSBC has achieved strong business growth during the first quarter of 2007 as a result of our continued investment in building our customer base and business volumes in Mexico. Year-on-year, our personal customer base is up by more than 800,000 clients, the number of credit cards in issue has increased by 69.4 per cent to 2.1 million cards, and our small business client base has risen by 21 per cent. Our packaged products have continued to be very successful, and in the first quarter we sold 170,000 Tu Cuenta and 1,718 Estimulo packages.

"Net income of MXN1,376 million in the first quarter of 2007, however, fell by MXN52 million compared with the first quarter of 2006 as overall strong revenue momentum was offset by reduced revenues in Global Markets, with trading income down MXN224 million year-on-year.

"The group achieved strong total revenue growth of 11.1 per cent – despite lower earnings from Global Markets – exceeding cost growth of 7.5 per cent for the period ended 31 March 2007 compared with the same period of 2006, and resulting in a cost efficiency improvement. Loan impairment charges grew as a consequence of our investment in expanding our consumer and small business commercial loan portfolios.

"In line with the HSBC Group's organic growth strategy, we continue to invest in building our business in Mexico, and are modernising and streamlining our processes to handle greater business volumes and provide improved services to our clients. By combining the Group's knowledge, network and brand with the experience and capabilities of our staff, we are driving product innovation and service enhancements to capture market share in key markets.

"Our commitment to Corporate Responsibility remains strong and I am pleased to announce that, in 2007, for the second consecutive year, the Mexican Philanthropy Centre (CEMEFI) and Aliarse recognised HSBC Mexico with a certification for Socially Responsible Company 2007."

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