The strategy that we first outlined for the HSBC Group in 2011 remains firmly in place. This year marks the start of the next phase of implementation. In the first six months of 2014 we continued to implement our three equal priorities: to grow the business and dividends; implement our Global Standards programme, and streamline our processes and procedures.
Reported profit before tax for the first six months was USD12.3 billion. Underlying profit before tax was USD12.6 billion, USD0.5 billion lower than the prior year. Annualised return on average ordinary shareholders’ equity was 10.7 per cent. Our capital position remained strong.
Between 2011 and 2013, we re-modelled the Group in line with our strategy. This meant selling or exiting non-strategic businesses and running down our legacy portfolios, as well as changing aspects of the way we do business. Whilst we have foregone a substantial amount of revenue through this process, we have created a more coherent, logical and stronger bank with a solid platform for growth.
We have created a more coherent, logical and stronger bank with a solid platform for growth
HSBC today is a universal bank with a presence in 74 markets, including all of the top 15 countries by GDP. Our universal banking model enables us to offer an integrated service between our global businesses and geographies. It increases our resilience as a Group and our ability to react to local circumstances and policy developments, whilst adhering to global standards.
HSBC’s biggest competitive strength is its international network. Developed over nearly 150 years, it is highly distinctive, difficult to replicate and ideally positioned for the world’s top trade corridors.
A significant proportion of revenue arises from strategic product areas that benefit from our international network and collaboration between our global businesses. These product areas include Global Trade and Receivables Finance, Payments and Cash Management, Foreign Exchange and renminbi services. These are our investment priorities for the next three years.
They are supported by investment in countries that bridge trade and capital flows – such as Germany, the United States and mainland China – and large city clusters with high concentrations of international firms.
We believe this investment will lead to growth in profits and increased dividends for our shareholders. We are pursuing these alongside our equal priorities to implement our Global Standards programme and streamline our processes and procedures.
We remain broadly positive about the economic outlook for the majority of our home and priority markets. We remain well placed to meet expected future capital requirements, to continue to deliver an attractive total shareholder return and to establish HSBC as the world’s leading international bank.