HSBC Holdings Regulatory News (HSBA)

26 May 2006 11:04

HSBC Holdings PLC26 May 2006 HSBC HOLDINGS PLC ANNUAL GENERAL MEETING Statement given by Sir John Bond, Group Chairman, HSBC Holdings plc, at theAnnual General Meeting held at the Barbican Hall, London, on Friday, 26 May2006. 2005 was another year of sustained progress. We grew profit attributable toshareholders by 17 per cent. This represents US$1.36 per share, an increase of15 per cent. The total dividend in respect of 2005 was 73 US cents per share, anincrease of 10.6 per cent over the dividends for 2004. Our all-round performance during the last three years has brought impressivereturns to our shareholders. Viewed from a rather longer perspective, HSBC'sdividend has achieved a compound annual growth rate of 17.3 per cent since 1990. Our results for 2005 reflect our success in increasing revenues and improvingproductivity, in line with our Managing for Growth strategic plan. Our earningsremained well diversified both geographically and by customer group. We achievedgood growth and further efficiencies in our core UK personal and commercialbanking businesses. Worldwide, we grew our commercial banking business stronglyon the back of recent investments. We have continued to invest in the future of our business and in two key areasin particular. One of them, the development of our personal financial servicesbusiness in Asia, has attracted relatively little attention. However, ourprogress has been encouraging. For example, in 2005 we expanded our card base inthe region to 10.3 million, adding 2.1 million cards during the year. The other, which has attracted a good deal of comment, is the development of ourCorporate, Investment Banking and Markets business, which we refer to as CIBM.We remain firmly committed to our five-year strategic plan for CIBM. We are ontrack and gaining momentum in the areas of investment. Cost growth peaked during2005 and there is clear evidence of positive client response to our expandedproduct capabilities. We have won a number of important new mandates andimproved our position in various league tables, particularly for internationalbond issuance. Although we made a small number of acquisitions in 2005 to complement existingbusinesses, our strong preference is to concentrate on organic growth.Acquisition opportunities are brought to us from time to time. However, we shallonly respond positively to those which meet strict criteria and which are inyour long-term interests. HSBC has an unusually wide geographical footprint. As we look around the worldwe see numerous opportunities to build on our existing operations. The developedeconomies are often referred to as 'mature' and this suggests that there arelimited opportunities for growth. However, we believe that there is ample scopeto improve productivity and to increase our market share through new productsand superior customer service. At the same time, there are excitingopportunities to expand in the emerging markets which are underbanked and wherethe demand for all kinds of financial services is growing rapidly. These includecountries such as China, India, Mexico, Brazil, Turkey and Vietnam. I have spoken at previous AGMs about the growing influence of the emergingmarkets and particularly of China and India. Too often, this rebalancing of theworld economy is portrayed as a threat to the West. We must hope that suchperceptions do not fuel protectionist sentiments. HSBC believes that the currentimbalance between rich and poor countries is unsustainable. We also believethat, although the emerging markets' growing share of the world economy willinvolve some profound and at times uncomfortable changes for developedcountries, it will bring enormous opportunities. Those countries and companieswhich are prepared to adapt and are nimble will discover new markets for theirproducts and services. They will prosper. HSBC's origins, of course, lie in the emerging markets. Some, like Hong Kong,having enjoyed several decades of fast growth, became developed economies.Others, in turn, are now displaying the same characteristics that we witnessedin parts of Asia during the 1960s and 1970s. HSBC has the history, the humanexpertise, the technological capabilities and the physical presence to build itsbusiness in such markets. It also has the international network to capture agrowing share of the trade flows which will result from their greaterparticipation in the world economy. At a time when there is renewed debate insome countries about the optimum level of foreign participation in domesticfinancial systems, our long-established presence is an advantage. For our shareholders, HSBC offers a uniquely well diversified internationalinvestment in an increasingly interconnected world. We have a physical presencein 76 countries and territories. We have customers in 200 countries. No onecountry accounts for more than 25 per cent of our pre-tax profits. At almost 20per cent in 2005, the emerging markets already account for a significant andgrowing share of our worldwide earnings. When we reported our results for 2005 in early March we said that, although weremain mindful of the imbalances in the world economy, the outlook for 2006 wasencouraging. So far, this has proved to be the case. We have seen broadly basedeconomic growth. The US economy has been strong and it is now clear that thespike in bankruptcy filings experienced in the final quarter of last year was aresult of changes in bankruptcy laws rather than economic deterioration. Our largest businesses - those in the US, Hong Kong and the UK - have allperformed well and overall our credit experience remains good. CIBM's resultsreflect favourable trading conditions in the first quarter of the year and wehave made significant progress in the areas in which we have invested. Therewere also strong contributions from our operations in Mexico, Malaysia,Singapore, China, India, Brazil, and the Middle East. As at the end of the firstquarter, the results of all of our customer groups were better than thoseachieved during the same period last year. Many shareholders will be aware of the growing public interest in corporatesocial responsibility. We continue to hold robustly to the view that our firstresponsibility is to be successful. However, we also believe that, far frombeing incompatible, sustainable success and good conduct actually go hand inhand. Like any organisation, HSBC is not perfect but its tradition of alwaystrying to do the right thing - by its customers, its shareholders, its employeesand the wider community it serves - goes back to its earliest days. In fact,balancing our various obligations can be challenging in today's complex world.Fortunately, we are able to draw on a vast amount of knowledge and expertise toguide us on a range of social, ethical and environmental issues. We have made further progress during the last 12 months. For example, we believewe were the world's first major bank to become carbon neutral. We have a farbetter grasp of our direct impact on the environment now than we had three yearsago. At the same time, we continue to review our indirect impacts. We haveintroduced additional guidelines for lending to environmentally sensitivesectors. We are prepared to turn down business where it is incompatible with thestandards we have set for ourselves, but our strong preference is to workclosely and constructively with our clients. We continue to share our success and to support the communities we serve aroundthe world. Education and the environment are our principal areas of citizenship. HSBC's success is due in large part to the talents and dedication of my 284,000colleagues around the world. By meeting our customers' needs the people who workfor HSBC serve our shareholders and I take this opportunity to thank them warmlyfor their immense contribution to your company's performance. Difficult thoughit may be for the investment community to evaluate, it is the human fabric andthe character of HSBC which sets it apart from its competitors. Our people areour brand. Similarly, I am indebted to my fellow Directors for the expertise they bring tothe conduct of your company's affairs. Since the last AGM, Simon Robertson hasbeen appointed an independent non-executive Director. Simon is non-executiveChairman of Rolls-Royce Group plc, the former Chairman of Dresdner KleinwortBenson and a former Managing Director of Goldman Sachs International. Sir John Kemp-Welch retires today and I take this opportunity to thank him forthe great knowledge and wisdom he has brought to the business of the Board. Alan Jebson also retires today. Alan has given 28 years of distinguished serviceto HSBC. He has played a key role in the vital area of information technologyand has also led the development of our global resourcing initiative. I, too, retire at the conclusion of today's meeting. It has been an immenseprivilege and a pleasure to serve HSBC for the last 45 years, and as yourChairman for the last eight. Today, Stephen Green will succeed me as GroupChairman and Michael Geoghegan will succeed Stephen as Group Chief Executive.Management continuity is a hallmark of HSBC and today's succession will beseamless. I hope you will join me in congratulating Stephen and Michael on theirappointments. They are supremely well qualified to take HSBC forward and theywill work tirelessly in the long-term interests of our shareholders. 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