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

27 February 2008

• Net income up MXN46 million (approximately 1 per cent), to MXN5,615 million for the year ended 31 December 2007 (MXN5,569 million for the year ended 31 December 2006).  For the quarter ended 31 December 2007, net income rose 45.2 per cent compared to the same period in 2006, reaching MXN1,687 million.
• Total revenues (excluding monetary position and before loan impairment charges) up 17.5 per cent to MXN35,052 million for the year ended 31 December 2007 (MXN29,832 million for the year ended 31 December 2006).
• Net loans and advances to customers up MXN28.7 billion, or 17.9 per cent, to MXN189.5 billion at 31 December 2007 (MXN160.8 billion at 31 December 2006).
• Total customer deposits up MXN39.7 billion, or 17.8 per cent, to MXN262.7 billion at 31 December 2007 (MXN223.0 billion at 31 December 2006).
• Cost efficiency ratio (excluding monetary position) improved to 58.7 per cent for the year ended 31 December 2007 (60.6 per cent for the year ended 31 December 2006).
• Return on equity of 15.6 per cent for the year ended 31 December 2007 (18.6 per cent for the year ended 31 December 2006).

HSBC Mexico S.A. (the bank) is Grupo Financiero HSBC, S.A. de C.V.'s (HSBC) primary subsidiary company, 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 31December 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 of 31 December 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, with the income statement as presented in Appendix A. The financial statements on pages 7-16 include HSBC Panama up to the date of disposal.

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

Commentary by Paul Thurston, CEO of Grupo Financiero HSBC:

"Grupo Financiero HSBC ended 2007 strongly, with net income for the fourth quarter reaching a record high MXN1,687 million, up 45.2 per cent compared with the same quarter of the prior year. Net income for the year ended 31 December 2007 reached MXN5,615 million, up by MXN46 million compared with the prior year. Strong revenue growth of 17.5 per cent, to MXN35.1 billion, despite lower earnings from trading and balance sheet management, enabled us to continue to invest in building the consumer credit portfolio and to absorb the related higher loan impairment charges. 

"In 2007, Grupo Financiero HSBC, continued to expand its business presence across the personal, commercial and corporate business segments in a highly competitive environment. Credit cards lending balances were up 85.1 per cent year on year to MXN27.3 billion. Personal and payroll loans rose by 60.1 per cent to MXN8.2 billion and the commercial loan portfolio grew by 21.3 per cent to MXN73.2 billion. Customer deposits increased by 17.8 per cent compared with the same period of 2006.

"The HSBC Premier service was re-launched globally during 2007, providing seamless cross-border banking for our customers in Mexico and around the world. In addition, 293,900 new Tu Cuenta packaged products were sold during the year.  Increased cross-selling activities in the branch network resulted in higher premium income for the insurance subsidiary further diversifying our sources of income.

"In our commercial business, we launched electronic account opening facilities and a new international factoring service, helping to drive an increase of 16 per cent in our base of commercial customers. This further increased our market share of international trade financing, and increased earnings from this customer segment.

"Consistent with the HSBC Group's organic growth strategy, we continued expanding our business platform during the year, with 304 new ATMs and further investment in marketing and information technology. Costs increased as we worked to improve client service by streamlining processes, modernising branches and investing in the people who will lead our future growth. The 13.7 per cent increase in costs for the year ended 31 December 2007 was exceeded by revenue growth, enabling us to record a cost efficiency improvement.

"Our aim is to become the leading financial services company in Mexico. Local talent, product knowledge and expertise combined with our extensive international network, the HSBC brand and the sharing of global best practices, represents a significant platform on which to continue building our business in Mexico.

"In the area of corporate responsibility, I am pleased to record that in February 2007 HSBC Mexico was awarded, for the second consecutive year, the ‘Socially Responsible Company' certification by the Mexican Philanthropy Centre (CEMEFI) and Aliarse. In November 2007, HSBC was also awarded Latin America's first-ever Leadership in Energy and Environmental Design (LEED) Gold certificate for our headquarters building in Mexico, recognizing it as the most environmentally friendly building of its type in Latin America." 

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