HSBC Holdings PLC · LSE:HSBA

HSBC — Investor Day (May 2013)

83 slides from HSBC's investor day presentation, May 15, 2013

1. Slide 1: Investor update – Strategy unchanged – Next phase

   15 May 2013 Investor update – Strategy unchanged – Next phase Stuart Gulliver Group Chief Executive Sean O’Sullivan Group Chief Operating Officer Iain Mackay Group Finance Director

2. Slide 2: Forward-looking statements

   Forward-looking statements This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward-looking statements represent the Group’s expectations or beliefs concerning fu

3. Slide 3: Agenda

   Agenda Session Time (BST) Distinctive position in the new banking environment 08.30-09.15 Proven track record in delivering change – First phase Break 09.15-09.30 Clear plan for growth and shareholder returns – Next phase 09.30-10.45 Questions and Answers 10.45-11.45 3

4. Slide 4: HSBC transformed since 2011

   HSBC transformed since 2011 Since 2011  52 disposals/exits announced since 2011, reduced c.USD95bn RWAs1 and c.15k FTE2  c.USD8bn gain on sale2  USD4.0bn in annualised sustainable saves and c.28k FTE reduction3 up to 1Q 2013  Double digit loan growth in 15 priority markets4,5  c.USD27bn capital

5. Slide 5: Next phase 2014-16

   Next phase 2014-16 Strategy remains unchanged  Grow both business and dividends  Implement Global Standards  Streamline processes and procedures Targets  ROE 12-15%1  Positive jaws  CER mid-50s2  Additional USD2-3bn in sustainable saves  Common equity tier 1 ratio >10%  Advances-to-deposits

6. Slide 6: Why should you own HSBC?

   Why should you own HSBC? A Distinctive position in the new banking environment I Long term trends remain valid II HSBC distinctive position B Proven track record in delivering change – First phase C Clear plan for growth and shareholder returns – Next phase 6

7. Slide 7: A lot has happened since 2011

   I. Long term trends remain valid A lot has happened since 2011  Eurozone crisis  Poor economic performance globally, also affecting faster growing markets (Mainland China, Macro- Brazil) environment  Persistently low interest rates  Break-down in trust in banks and sovereigns To what extent does

8. Slide 8: Rebalancing of the world economy remains a valid trend

   I. Long term trends remain valid Rebalancing of the world economy remains a valid trend MAY 2011 GDP of top 30 economies USDtrn Largest Share of 2050 106 countries GDP1 (%) Mainland China 20 India 7 57 Brazil 2 Mexico 2 19 of the top Turkey 2 30 economies Other 14 emerging 14 in 2050 will be from cu

9. Slide 9: Economic development and rebalancing continue

   I. Long term trends remain valid Economic development and rebalancing continue Emerging markets Developed markets 2010-12 2012-14 forecast Global GDP growth1 Largest countries2 GDP growth Global GDP growth1 Share of growth, % CAGR CAGR, % Share of growth, % CAGR 100%= USD2.0trn 100%= USD2.1trn Mainl

10. Slide 10: Trade growth continues to be driven by global imbalances

    I. Long term trends remain valid Trade growth continues to be driven by global imbalances MAY 2011 Trade will continue to grow Imbalances continue to drive capital flows World merchandise exports, USDtrn Net funding gap/surplus1, USDtrn, 2020E US (3.8) France (1.2) 31 Brazil (0.8) Canada (0.7) Korea

11. Slide 11: Trade growth and capital flows

    I. Long term trends remain valid Trade growth and capital flows Trade growth1 Capital flows2 Corridor Merchandise export Change in cross-border capital flows 2007-11, USDtrn 2010-12, CAGR, % Equity Debt Mature markets to FDI Securities Securities Loans Total 7 mature markets (0.6) Mature markets to/

12. Slide 12: Distinctive position in the new banking environment

    II. HSBC distinctive position Distinctive position in the new banking environment Key trends What matters going forward HSBC competitive advantages Economic  Organic investment opportunities in  Meaningful presence in many of the most development and the most attractive growth markets attractive g

13. Slide 13: Present in the most attractive markets

    II. HSBC distinctive position Present in the most attractive markets GDP and total banking revenues growth Market growth in HSBC priority markets Share of growth, 2012-20, % Share of total addressable banking CAGR revenues growth 2012-20, % 2012-20 Other2 Hong Kong Faster 42% Indonesia growing 47% 5

14. Slide 14: In Mainland China c.70% of the international opportunity in the top-10 city clusters

    II. HSBC distinctive position EXAMPLE In Mainland China c.70% of the international opportunity in the top-10 city clusters Mainland China city clusters Example: Guangzhou-Shenzhen city cluster % of Mainland China total Major cities of cluster Top-10 city clusters c.30 Conghua c.70 c.70 Zengcheng Gua

15. Slide 15: In Brazil and India similarly concentrated opportunity

    II. HSBC distinctive position In Brazil and India similarly concentrated opportunity EXAMPLE Top-10 city  HSBC branch clusters presence Brazil top-10 city clusters India top-10 city clusters % of Brazil total % of India total c.20 c.40 c.50 c.80 c.80 c.70 c.80 c.60 c.50 c.20 c.20 c.30 Population GD

16. Slide 16: HSBC network covers over 90% of international trade and capital flows

    II. HSBC distinctive position HSBC network covers over 90% of international trade and capital flows Trade and capital flow connectivity is concentrated HSBC network covers >90% of global flows Cumulative growth in total merchandise export and % of world import, 2012-2022, 100% = USD35.0trn HSBC cove

17. Slide 17: Advantages of a universal banking business model

    II. HSBC distinctive position Advantages of a universal banking business model Well diversified stream of earnings … … and strong funding base Distribution of net operating income1, 2012, % Customer accounts, 31 December 2012, USDbn GPB Other Europe 555 41% 4% GB&M 3% RBWM Asia 530 40% 25% 46% N. Am

18. Slide 18: Why should you own HSBC?

    Why should you own HSBC? A Distinctive position in the new banking environment B Proven track record in delivering change – First phase I Capital deployment II Cost efficiency III Growth C Clear plan for growth and shareholder returns – Next phase 18

19. Slide 19: At the beginning of 2011 defined a new vision for HSBC

    Proven track record in delivering change – First phase At the beginning of 2011 defined a new vision for HSBC Throughout our history we have been where the growth is, connecting customers to opportunities. We enable Purpose businesses to thrive and economies to prosper, helping Reason why we exist p

20. Slide 20: Unexpected events since May 2011

    Proven track record in delivering change – First phase Unexpected events since May 2011 Events Impact  Eurozone crisis Unexpected Reduced  Impact on faster growing markets events had revenues  Sustained level of low interest rates significant impact on planned  Extent of under-investment in comp

21. Slide 21: Material progress over the last two years

    Proven track record in delivering change – First phase Material progress over the last two years May 2011 report card Progress to date  Six Filters driving disposals and closures  52 disposals/exits announced since 2011, of non-strategic and/or underperforming reduced c.USD95bn RWAs1 and c.15k FTE

22. Slide 22: Portfolio criteria applied with discipline, reshaping the Group

    I. Capital Deployment Portfolio criteria applied with discipline, reshaping the Group Using the Six Filters in decision-making Five Filters Sixth filter What is the strategic Are the current returns Do we adhere to global Resulting actions relevance? attractive? risk standards? 1. Connectivity 3. Pr

23. Slide 23: The six filters have led to an unprecedented number of disposals and exits

    I. Capital Deployment The six filters have led to an unprecedented number of disposals and exits Acquisitions Disposals and exits Transactions 48 35 24 Number of 6 strategic transactions 9 announced1 20 23 522  CCF, Banque Hervet  Bank of Bermuda  Bank Ekonomi  BoCom4  Demirbank TAS  Lloyds (B

24. Slide 24: Reduced fragmentation and focused the portfolio

    I. Capital Deployment Reduced fragmentation and focused the portfolio Europe North America 17 transactions, including  HFC secured loans portfolio 9 transactions, including  Georgia, Hungary, Slovakia  US Cards and Retail Services  General Insurance in UK, Ireland, France  US upstate NY branche

25. Slide 25: Refocused our Associate investments

    I. Capital Deployment Refocused our Associate investments Share of profit Associate HSBC stake1, % Fair value1 from associates USDbn USDbn, 2012 Bank of Communications 19.0 10.6 1.7 Associates Saudi British Bank 40.0 3.2 0.3 Bank of Not Not Shanghai 8.0 disclosed disclosed Investments Industrial Ban

26. Slide 26: Progress in running down and de-risking US legacy portfolio

    I. Capital Deployment Progress in running down and de-risking US legacy portfolio Continued run-off of CML portfolio CML portfolio receivables, USDbn Non-real estate  Non-real estate portfolio – Sale completed Real estate 01APR13; interim servicing until conversion -43%  Real estate portfolio 72 ‒

27. Slide 27: GB&M legacy portfolio managed to protect shareholder value

    I. Capital Deployment GB&M legacy portfolio managed to protect shareholder value ABS portfolio carrying value1 USDbn  Portfolio reduced by USD15bn since 2010 47 -32%  Hold versus dispose decisions based on a clear economic 32 framework (considering cost of capital and funding)  Strong capital bas

28. Slide 28: Established a simplified, more focused and easier to manage organisation

    II. Organisation Established a simplified, more focused and easier to manage organisation Progress  Developing global strategies Created four  Defining and implementing consistent business and operating model Global  Focus on clear portfolio of activities Businesses  Oversight by Group Managemen

29. Slide 29: Four Global Businesses with clear scope of activities

    II. Organisation Four Global Businesses with clear scope of activities Global Banking Retail Banking and Commercial Banking and Markets Wealth Management Global Private Bank  Deposits  Deposits  Deposits  Deposits  Payments and cash  Payments and  Account services  Account services Liability

30. Slide 30: Strong leadership team and talent pipeline

    II. Organisation Strong leadership team and talent pipeline Description  Senior leadership team with long experience in the industry – Group Management Board – 13 senior executives leading the Group, Global Businesses and Regions, average tenure of 22 years1 with HSBC Leadership – Group General Man

31. Slide 31: Simplifying the firm

    II. Organisation Simplifying the firm Employees FTE, thousands Transformation 299 295 296  Reshaped portfolio 294  Simplified organisation 288 285  Established Four Programmes -39k Outcome 272  USD4.0bn in annualised 267 sustainable saves by 1Q 2013 261 260  Net reduction of 39k FTE, including

32. Slide 32: Progress across our Global Businesses

    III.Growth Progress across our Global Businesses Reported performance Reported performance PBT, USDbn PBT, USDbn +149% +40% 9.6 8.5 3.8 6.1 7.1 CMB RBWM 5.9 US CRS 3.8 2.0 US run-off (4.1) (1.3) 2010 2012 2010 2012 RoRWA 2.0 2.2 RoRWA 1.1 3.1 -8% 9.2 8.5 GB&M GPB 9.0 8.8 -4% 1.1 1.0 0.2 (0.3) Legacy

33. Slide 33: Cohesive and focused geographic portfolio

    III.Growth Cohesive and focused geographic portfolio MAY 2012 Hong Kong and Middle East and Rest of Asia Pacific Europe North Africa North America Latin America Home  United  Hong Kong markets Kingdom  Australia  France  Egypt  Canada  Argentina  Mainland China  Germany  Saudi Arabia  USA

34. Slide 34: Double digit growth in priority faster growing regions enabled us to outperform global growth

    III.Growth Double digit growth in priority faster growing regions enabled us to outperform global growth Reported regional Loan growth1 PBT growth2 Gross loans, %, 2010-12 %, 2010-12 Indonesia 61 Taiwan 41 Hong Kong and Mainland China 40 Rest of Asia- Vietnam 37 2010-2012 HSBC Pacific India 34 343 f

35. Slide 35: Gained market share in priority mature markets

    III.Growth Gained market share in priority mature markets 2010-2012 change in market share  Market share of 12% on new mortgages, up from 9% in 20101 UK  17% market share of the UK trade finance market, up from 13% in 20112  Ranked 5th bank for mutual funds sales, fastest growing bank in this sec

36. Slide 36: Significant momentum in the transformation of RBWM

    III.Growth Significant momentum in the transformation of RBWM Material progress Wealth target  Established RBWM as Global Business  Wealth revenues comprise of ‒ Standardised organisation structure ‒ Investments ‒ Global portfolio management ‒ Life insurance ‒ Common business/operating model ‒ FX

37. Slide 37: Global Businesses collaboration generated USD0.9bn in additional revenues

    III.Growth Global Businesses collaboration generated USD0.9bn in additional revenues Implemented actions Incremental collaboration revenues USDbn 2.0  Collaboration process established across key hubs, including wallet sizing, client planning and pipeline management processes  New senior appointme

38. Slide 38: Shareholders’ equity c.USD27bn and declared dividends c.USD16bn

    Outcome Shareholders’ equity c.USD27bn and declared dividends c.USD16bn Shareholders’ equity Total dividends declared in respect of the year1 USDbn USDbn 175 8.3 In 2011/2012 HSBC 7.3 has been: 6.3  #2 dividend 27 payer2 in FTSE 100  #5 dividend 148 payer2 in Hang Seng index HSBC would be #3 divid

39. Slide 39: Shareholder returns

    Outcome Shareholder returns HSBC share price growth vs. MSCI World Bank index 31DEC10-10MAY13, % Performance from end 2010: HSBC  Share price up 14% versus MSCI 14 World Bank Index 9%1  Market capitalisation increase of c.GBP24bn +1.6x  Total shareholder return (TSR) 27% MSCI  Price to book rati

40. Slide 40: Why should you own HSBC?

    Why should you own HSBC? A Distinctive position in the new banking environment B Proven track record in delivering change – First phase Break C Clear plan for growth and shareholder returns – Next phase 40

41. Slide 41: Why should you own HSBC?

    Why should you own HSBC? A Distinctive position in the new banking environment B Proven track record in delivering change – First phase C Clear plan for growth and shareholder returns – Next phase I Priorities II Financial targets III Vision 41

42. Slide 42: Strategic priorities for the next phase 2014-16

    I. Priorities Strategic priorities for the next phase 2014-16 Actions and priorities By 2016  Continue to recycle RWAs from  Continue to grow RWAs in line with our organic low into high performing investment criteria Grow both opportunities within the Group’s  Progressively grow dividends and int

43. Slide 43: Clear organic investment criteria

    I. Priorities – Grow both business and dividends Clear organic investment criteria Where should we invest additional resources? Strategic  Is it strategic? What fits HSBC’s portfolio? Invest only in ‒ Mostly in 22 home and priority businesses aligned markets  Connectivity to our strategy ‒ Target

44. Slide 44: Investment decisions driven by Group Management Board

    I. Priorities – Grow both business and dividends Investment decisions driven by Group Management Board Investment model Approach Profits Invest remitted to ment  Organic investment Holdings evaluation and decisions Asia Latin America MENA made by Group Management Board, under delegated authority fr

45. Slide 45: 70-75% of discretionary RWA growth to faster growing regions

    I. Priorities – Grow both business and dividends 70-75% of discretionary RWA growth to faster growing regions ESTIMATES Priority growth areas Share of discretionary RWA growth1 2012-16, % CMB GB&M RBWM GPB Total4 Faster growing c.40 c.15-20 c.70-75 regions2 c.70 Based on current c.15 <3 assumptions

46. Slide 46: CMB growth priorities

    I. Priorities – Grow both business and dividends CMB growth priorities The Leading International Trade and Business Bank Growth priorities to 2016 2016 targets Drive revenue growth through international network  Accelerate Corporate segment growth Financial RoRWA4, % 2.2-2.5  Continue to invest in

47. Slide 47: CMB – client examples

    I. Priorities – Grow both business and dividends CMB – client examples  UK manufacturer of  Hong Kong-based  Leading Chinese innovative hairbrushes manufacturing, services, electric/home appliance Customer hospitality and logistics group manufacturer  60 markets  17 markets  130 markets  Supp

48. Slide 48: GB&M growth priorities

    I. Priorities – Grow both business and dividends GB&M growth priorities Connecting clients to global growth opportunities Growth priorities to 2016 2016 targets Well-positioned in products that will benefit from global trends  Debt Capital Markets – Corporates in Europe and Asia shifting Financial

49. Slide 49: GB&M has a distinctive business model

    I. Priorities – Grow both business and dividends GB&M has a distinctive business model GB&M competitive advantages Example areas of focus  Over 60 markets, including the most Global FX and Rates Top 52 relevant faster growing and mature markets International network Global EM DCM #13 Global PCM #14

50. Slide 50: GB&M – client examples

    I. Priorities – Grow both business and dividends GB&M – client examples What has HSBC done? Client Examples of recent transactions Why HSBC?  100 year relationship, across 25+ countries Advised on increasing stake in Indian subsidiary to 72.5%, USD900m deal,  India equities and cross-border expert

51. Slide 51: RBWM growth priorities

    I. Priorities – Grow both business and dividends RBWM growth priorities Securing customers’ future prosperity and realising their ambitions Growth priorities to 2016 2016 targets Growth in priority markets RoRWA1, % 3.8-4.3  Grow number of customers in target segments RoRWA1, 5.0-5.5 Financial excl

52. Slide 52: Examples – RBWM investments into digital

    I. Priorities – Grow both business and dividends Examples – RBWM investments into digital Example investments  Mobile Banking App – iOS and Android versions  Mobile Payments – Progressive deployment of Mobile simple and secure contactless payments  Advanced capabilities – Mobile stock and FX Trad

53. Slide 53: GPB growth priorities

    I. Priorities – Grow both business and dividends GPB growth priorities Building on our commercial banking heritage, be the leading private bank for business owners Priorities to 2016 2016 targets Reposition the business  Focus on home and growth priority markets, particularly onshore Financial Retu

54. Slide 54: Global Standards as source of competitive advantage

    I. Priorities – Implement Global Standards Global Standards as source of competitive advantage Throughout our history we have been where the growth is, connecting customers to opportunities. We enable Purpose businesses to thrive and economies to prosper, helping Reason why we exist people fulfil th

55. Slide 55: Global Standards define governance and programmes

    I. Priorities – Implement Global Standards Global Standards define governance and programmes Financial System  Provides governance, oversight and policy advice to simplify business Vulnerabilities activities and enhance risk management and control Committee1  Sets the strategic direction and prior

56. Slide 56: Change in day-to-day activities

    I. Priorities – Implement Global Standards Change in day-to-day activities Progress to date  Designed and launched global Wealth risk framework Risk  Introducing risk profiling tools and enhanced customer due diligence to ensure frameworks sales suitability  Deployed global Wealth incentive frame

57. Slide 57: First phase: Achieved USD3.3bn sustainable cost saves during 2011 – 1Q 2013

    I. Priorities – Streamline processes and procedures First phase: Achieved USD3.3bn sustainable cost saves during 2011 – 1Q 2013 or USD4.0bn on annualised basis Four programmes Example initiatives USDbn1 People & Structure Re-engineer  Implemented ‘8x8’ programme operational processes 1.1 0.8 Softwa

58. Slide 58: First phase: We have put in place a structure to manage the bank globally

    I. Priorities – Streamline processes and procedures First phase: We have put in place a structure to manage the bank globally From To Cohesive and Focus on 22 Home and Fragmented Focused Priority markets Complex Simplified Implemented 8x8 Management Management programme Structures Structures Federat

59. Slide 59: Next phase: Significant opportunities

    I. Priorities – Streamline processes and procedures Next phase: Significant opportunities Opportunities (examples) Themes  Unnecessary complexity – More than 4,000 management information reports – 1,100 facilities management vendors Simplify  Inconsistent processes and systems between different ma

60. Slide 60: Other industries have pursued large transformations

    I. Priorities – Streamline processes and procedures Other industries have pursued large transformations Challenged industries and transformation impact Tele- 80s–90s: End of monopolies communication -40% cost ▪ Increase of competition -30% FTE costs ▪ New technologies  Challenged -50% throughput ti

61. Slide 61: Example: Mortgage process globalisation

    I. Priorities – Streamline processes and procedures Example: Mortgage process globalisation Description  Front-to-back redesign of the mortgage process  Delivers simultaneous improvements in customer experience, revenues and costs Progress  Improvements launched – Immediate credit decision in bra

62. Slide 62: Target additional USD2-3bn sustainable saves 2014-16

    I. Priorities – Streamline processes and procedures Target additional USD2-3bn sustainable saves 2014-16 Sustainable savings target Employees USDbn FTE, Thousands First phase: 2011-13 Next phase c.4 2014-16 295 288 261 3.3 c.240-250 2.5-3.5 Another 2-3 Target 1Q2013 FY2013 Target 2010 2011 2012 2014

63. Slide 63: Simplify

    I. Priorities – Streamline processes and procedures Simplify Approach Examples  Identify activities with potential opportunity to  Centralise, standardise and rationalise Management MI production and implement a simplify information consistent finance operating model  Map the current activity or

64. Slide 64: United States

    I. Priorities – Streamline processes and procedures United States Clearly defined strategy Focus the US business on our international capabilities  International corporate and institutional clients  New York as a GB&M hub for the Americas  Internationally connected clients in gateway geographies

65. Slide 65: Globalise

    I. Priorities – Streamline processes and procedures Globalise Approach Examples  Redesigning customer journeys, including  Identify inconsistent account opening and complaints handling, RBWM processes to improve customer experience and re-engineering efficiency whilst reducing risk  Define custom

66. Slide 66: Why should you own HSBC?

    Why should you own HSBC? A Distinctive position in the new banking environment B Proven track record in delivering change – First phase C Clear plan for growth and shareholder returns – Next phase I Priorities II Financial targets III Vision 66

67. Slide 67: Recap recent performance versus targets

    II. Financial targets Recap recent performance versus targets Reported performance Target 2010 2011 2012 1Q 2013 2011-13 2014-16 Jaws Negative Negative Negative Positive n/a Positive Efficiency CER1 55.2% 57.5% 62.8% 50.8% 48-52% Mid-50s Profitability ROE 9.5% 10.9% 8.4% 14.9% 12-15% 12-15% Common e

68. Slide 68: Sustainable cost saves re-invested in 2012

    II. Financial targets – Efficiency Sustainable cost saves re-invested in 2012 Operating expenses 2011-2012 USDbn  Investment in compliance, growth  US fine and penalties1 – USD1.9bn and infrastructure – USD0.8bn  UK Customer Redress – USD1.4bn  Strategic initiatives and related  Restructuring c

69. Slide 69: Cost focus supported by positive jaws

    II. Financial targets – Efficiency Cost focus supported by positive jaws Rationale for positive jaws Drivers of jaws Description  Demonstrates continuing  On-going delivery of sustainable saves, and re- commitment to an Sustainable saves deployment into investment opportunities improving CER  Con

70. Slide 70: ‘Growth HSBC’

    II. Financial targets – Profitability ‘Growth HSBC’ Underlying PBT 2012 USDbn Run-off Disposals ‘Growth HSBC’ 6.31 18.1 9.1 16.4 1.4 0.3 0.2 (0.1) 7.5 7.8 2012 US GB&M CRS Non- ‘Growth Notable GB&M ‘Home Growth, PBT run off legacy strategic HSBC’ revenue markets’ network markets and cost and small e

71. Slide 71: RoRWA targets defined by Global Business

    II. Financial targets – Profitability RoRWA targets defined by Global Business 2012 underlying results 2012 underlying results (CRD IV2) 2016 RoRWA target RoRWA RWAs1 RoRWA RWAs1,3 (CRD IV2) % USDbn % USDbn % CMB 2.1 381 2.1 384 2.2-2.5 GB&M 2.0 410 1.6 533 2.0-2.2 RBWM 1.4 289 1.3 306 3.8-4.3 RBWM

72. Slide 72: RoRWA performance by Region

    II. Financial targets – Profitability RoRWA performance by Region 2012 underlying results 2012 underlying results (CRD IV2) 2016 RoRWA target RoRWA RWAs1 RoRWA RWAs1,3 (CRD IV2) % USDbn % USDbn % Hong Kong 6.6 108 5.8 124 3.2-3.8 Rest of 2.3 280 2.2 296 Asia Pacific Europe 0.2 330 0.2 413 1.4-1.7 La

73. Slide 73: Capital strength – CRD IV end point 1Q 2013

    II. Financial targets – Capital Capital strength – CRD IV end point 1Q 2013 CT1/CET11 ratio %  CT1/CET1 USD16bn (including threshold deductions, Immaterial Holdings and other movements in Capital)  RWAs USD162bn (including CVA and  CET1 USD5bn Material Holdings adjustments to RWAs)  RWAs USD2bn

74. Slide 74: Regulatory uncertainty remains

    II. Financial targets – Capital Regulatory uncertainty remains Further sources of CRD IV Common Equity Tier 1 and other capital requirements uncertainty  Capital planning buffer Fixed amount  CRD IV – uncertainty in PRA how buffers will be  Individual capital guidance Multiplier plus add-on imple

75. Slide 75: Earnings split

    II. Financial targets – Grow both business and dividends Earnings split Investment model Profits remitted to Holdings Dividends Investment Variable pay Latin Earnings retained Asia MENA America Delivering consistent returns From: To: Capital retention, HSBC Holdings dividends and share buy-backs1 35

76. Slide 76: Grow both business and dividends

    II. Financial targets – Grow both business and dividends Grow both business and dividends  Historical capital generation from earnings gross of dividends – 2010 117bps1 Earnings – 2011 127bps1 Capital – 2012 147bps1 generation Legacy  Continue to aggressively manage down through run-offs and run-o

77. Slide 77: Why should you own HSBC?

    Why should you own HSBC? A Distinctive position in the new banking environment B Proven track record in delivering change – First phase C Clear plan for growth and shareholder returns – Next phase I Priorities II Financial targets III Vision 77

78. Slide 78: Four Global Businesses

    III.Vision Four Global Businesses Directional PBT 2016 target Four integrated global businesses contribution RoRWA % of Group total % “The Leading International Trade and 30-40 2.2-2.5 CMB Business Bank” “Securing customers’ future prosperity 25-35 5.0-5.51 RBWM “To become and realising their ambiti

79. Slide 79: Network and Small markets

    III.Vision Cohesive geographic portfolio HSBC network Region Home and Priority markets Other markets PBT contribution Asia  Hong Kong  Indonesia  Singapore  Australia  Mainland China  Taiwan Pacific  India  Malaysia  Vietnam Faster growing  Argentina regions Latin  Brazil Network and Smal

80. Slide 80: Next phase 2014-16

    Next phase 2014-16 Strategy remains unchanged  Grow both business and dividends  Implement Global Standards  Streamline processes and procedures Targets  ROE 12-15%1  Positive jaws  CER mid-50s2  Additional USD2-3bn in sustainable saves  Common equity tier 1 ratio >10%  Advances-to-deposits

81. Slide 81: Definitions (1/3)

    Definitions (1/3) A/D ratio Customer advances to customer accounts ABS Asset backed securities AFS Available for sale CAGR Compound annual growth rate CDO Collateralised Debt Obligation The cost efficiency ratio is total operating expenses divided by net operating income before CER loan impairment c

82. Slide 82: Definitions (2/3)

    Definitions (2/3) Changes in fair value due to movements in credit spread on own long-term debt issued by FVOD the Group and designated at fair value. GB&M Global Banking and Markets GPB Global Private Banking The term ‘Growth HSBC’ is used in an analysis of HSBC’s results, showing the effect of Gro

83. Slide 83: Definitions (3/3)

    Definitions (3/3) PCM Payments and Cash Management Priority growth markets are Australia, Mainland China, India, Indonesia, Malaysia, Priority growth Singapore, Taiwan, Vietnam, France, Germany, Switzerland, Turkey, Egypt, Saudi Arabia, markets United Arab Emirates, Canada, United States of America,

HSBC Holdings — Investor Day (May 2013) on 6ix