Strategy

On 23 November 2007, a Strategy Update was hosted by Stephen Green, Group Chairman, and Michael Geoghegan, Group Chief Executive.

HSBC: We are the world's local bank

• Largest international emerging markets bank
• Widespread international network
• Uniquely cosmopolitan customer base
• Considerable financial strength

Four key businesses

HSBC has four key businesses:

Global Banking and Markets: emerging markets-led and financing focused wholesale bank		Positioning for the next wave of global growth
Private Banking: a world leading international private bank integrated into a unique distribution network		Building on intra-Group referrals
Commercial Banking: the leading international business bank and best small business bank		Strengthening international links
Personal Finance Services: use our global scale and local knowledge to grow profitably in selected markets		We will use the business models, which give us a 'right to win'

Alignment of presence with global trends

HSBC's strategy is aligned with three trends which are shaping the global economy

1. Emerging markets are growing faster than developed countries
2. World trade is expanding faster than GDP
3. Longevity is increasing virtually everywhere

Building on HSBC's heritage

Our strategy is focused on delivery superior growth and earnings over time

Invest primarily on high growth economies

The business is being re-shaped to focus primarily on high growth economies, by aspiring to trend to 60% of revenues coming from these economies. When looking at the developed markets business, focus is to build particularly on those parts of the customer base which have international connectivity for which our "right to win" is particularly meaningful.

Focusing on business models defining our 'right to win'

Global Banking and Markets: 4,000 international customers, where emerging markets, balance sheet and global platforms (HSBCnet, Payments & Cash Management, Global Sub-Custody, Trade Services) are HSBC's calling card

Private Banking: 90,000 customers, where our international connectivity and emerging markets footprint are HSBC's calling card

Commercial Banking: 2.7 million customers locally, where top end customers and 40% of HSBC's SME customers have international needs, HSBC's calling card. The platforms used are shared with the Global Banking and Markets business.

Personal Financial Services: the Global Premier market, focusing on customers looking for constant experience and recognition no matter where they are in the world allowing them to manage their credits and investments holistically.

This refers mainly to our SME customers in Commercial Banking and the mass market in Personal Financial Services. There are two key areas which will support this strategy:

• Technology and Services: through the allocation of more than 25% of IT expenses to"global platforms", delivery a higher level of STP on higher volumes and focused internet solutions.
• Global Resourcing: to continue transferring and reengineering processes to our group service centres, located in lower cost countries.

Currently there are two products that we single out as important given our actual strength:

• Credit cards: a leading global position building on our global presence as a top five issuer with over 120 million cards in force; and
• Direct Banking: building our model once and deploying many times. Initially launched in the US in Nov05 with US$12bn in deposits as at Jun07 – 90% new to the bank. Then rolled out to Taiwan and Korea in 2006 and 2007, with the expansion into further markets with strong savings pools.

It is our aspiration to roll out six totally standardized products worldwide: two assets, two liabilities and two insurance products.

Execution of strategy

Execution of HSBC's strategy entails improving intra-group linkages by joining up the Group's businesses and functions to more effectively create additional value. The HSBC brand and global networks will be leveraged to reach new customers and offer more services to existing ones. Efficiency will be enhanced by taking full advantage of local, regional and global economies of scale. Appropriate objectives and incentives will be adopted to encourage employees to be fully engaged in delivering the strategy.

Strategy Update: presentation and transcript

To access the full presentation and transcript, click on the following links: