FORM 6
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16
of
the Securities Exchange Act of 1934
For the month of May 2008
HSBC Holdings plc
42nd Floor, 8 Canada Square, London
E14 5HQ, England
(Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F).
Form 20-F X
Form 40-F
......
(Indicate by check mark whether the registrant
by furnishing the information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934).
Yes.......
No X
(If "Yes" is marked, indicate below the file
number assigned to the registrant in connection with Rule 12g3-2(b): 82-
..............).
At the Annual General Meeting of HSBC Holdings plc
I would like to say a few words about the context within
which HSBC has been doing its business - because it has been a long time since
banks and financial markets have been the focus of such attention.
The present turmoil is certain
ly the worst for a generation.
ualties and it's not over yet.
No one can be sure how fully it will impact economies around
the world; but we do know that there are lessons to be learned by ba
nks, regulators and investors.
I believe we are entering an era in which the industry's
recent propensity for high leverage - together with the extreme complexity of
some investment vehicles -
will no longer be acceptable.
Growth models that depended on such leverage are now
unsustainable.
This means that sustainable and profitable growth will come
through strategies that focus on
-
itioned in fast-growing markets;
-
aving good customer relationships based on
fairness
-
unning efficient operations
-
strong capital base and balance sheet.
ure strengths of your company.
claim we get everything right.
And, of course, we must work to build on our strengths and
work through challenges in some of our businesses
the fact is, HSBC has never pushed the financial
envelope.
We have always looked for sustainable profit growth, based
o
n a long-term strategic focus.
Abandoning problems, rather than fixing them - as it is
sometimes suggested we should - is not in our genes, because it is not in your
long-term interests.
Our growth strategy has defined our course since the
beginning of last year and it remain
s as valid now as it was then.
We aim to align ourselves with three long-term trends in the
world: first, emerging markets are growing faster than mature ones; second,
world trade and investment grow faster than the world economy, as the world
becomes increasingly interconnected; and third, longevity is increasing nearly
everywhere, creating new financial services needs for billions of
people.
To maintain our position as the world's leading
international emerging markets bank, we will continue to invest primarily in
fast-growing emerging markets; they will eventually represent 60
per cent of our business.
In developed markets, we aim to use our unique global
network for the benefit of our increasingly internationally connected
customers.
We are moving in the same direction as so many of our
customers - individuals, small businesses, big companies. It's true
in
- where we continue to invest to support our position
as the leading i
nternational banking presence.
, where we are building out in banking, secur
ities brokerage and insurance.
Or in the UK, where we launched our Business Direct internet
banking proposition - which gave us almost a quarter of
our new UK customers in 2007.
Or in the US, where, despite current problems, there are
clear opportunities that play to our strengths - especially with Hispanic
customers and with internationally oriented businesses - and where we will be
investing accordingly in the years ahead.
As we announced two weeks ago, our first quarter performance
for 2008 was ahead of
the comparable period in 2007.
We continued to generate capital, with good deposit growth
in all regions. And pre-tax profits were up in all our major emerging markets
in Asia-Pacific, the Middle East and
Our European businesses performed well with the
retail business increasing pre-tax
profit.
profit was down as a result of higher consumer finance
loan impairments and additional write-downs in Global Banking and Markets. Loan
impairment charges in our
consumer finance business were in line with
expectations
higher than the first quarter of
2007, but lower than the last.
Our Global Banking and Markets business remains strongly
profitable, with profits in the first quarter above the levels achieved in the
second half of 2007.
Our strong capital ratios remained broadly in line with
those at the end of 2007.
Given this performance, it is no coincidence that since the
last AGM, our total shareholder return has been one of the strongest performers
- at 97
while the average of our 28 competitors was 78.
But sustainable growth cannot simply be a matter
of
profit maximised year-by-year.
We believe that strong performance over the long term also
means making a contribution to the economic and social development
of
the communities we operate in.
We are proud, for example, that we were the first
international bank to open a rural development bank in
; and we are opening a second one in
I am proud, too, that colleagues around the world show
personal commit
ment to making a contribution.
Though only professionals were allowed to undertake
immediate relief work after the devastating
earthquake, my colleagues in
organised a blood donation campaign
have continued to provide exceptional service in very
difficult circumstances - when working in their branch became unsafe, they set
up a temporary office in the Manager's own home. And HSBC employees worldwide
have made personal d
onations to the relief effort.
hile they respond quickly and generously to disaster, they
al
so give on a day-to-day basis.
I recently met a colleague of mine from
, Constantin Droste, who founded a camp in
for children with physical and mental disabilities.
The camp, which is funded by volunteers' personal donations and fundraising
activities,
continued to operate even after the effects of the 2006 war
and the unsettled political environment; and it celebrates its 10th anniversary
this year.
And as a bank, too, we are hard at work on meeting the
challenge of climate change and achieving more environmentally sustainable
businesses. I'm pleased to say that our new Sustainability Report is available
as of today. This is a long journey, but we will never let up. Because it is
not an optional extra; it is intrinsic to our successful development and
sustained profit growth. It is in your best interests.
As a Board we are individually and collectively responsible
for the long-term health and growth of your company. Since the last AGM we have
welcomed four new independent non-executives: Safra Catz, José Luis
Durán, Sam Laidlaw
Each brings international experience and significant,
relevant bus
iness expertise to your Board.
Sadly, at the end of this AGM, we say farewell to three
directors who have given tireless and distinguished service over many years -
whose constructive, insightful guidance I have appreciated more than I suspect
they are fully aware of
irst, Lord Butler; second, the Deputy Chair and former
senior independent director Sir Brian Moffat; and last, but certainly not
least, our other Deputy Chair, Baroness Dunn
who has served on this board since the establishment of HSBC
Holdings plc
ore years than the Combined Code counts as technically
independent, for sure, but - I can tell you - as independent in judgment and
spirit as they come.
I am delighted too to welcome three new executive director
colleagues - Vincent Cheng, Sandy Flockhart and Stuart Gulliver - who bring to
your Board a combined total of 92 years' service with your company, covering
every continent where we do business.
Finally, neither your Board nor the top management team
could achieve anythi
ng for you without our people.
Our 330,000 colleagues who day-in, day-out, make the
performance
of the Bank as good as it is.
On your behalf, I would like publicly
is what builds the HSBC brand.
Forbes Magazine rated us the number one company in the world
recently. The Banker rates us the number one banking brand in the world and
Interbrand
the respected branding consultant
most valuable of all brands - and we've been moving
steadily up the league table. The brand represents what we always strive to be:
long-term in our commitments, open to a connected world, locally rooted and
locally sensitive, believers in our people and clo
the 2008 outlook is difficult.
will be weak and may well move into recession -
although recent indicators are sending rather mixed signals.
will be relatively weak - although the Eurozone has
recently shown unexpected signs of resilience. No one knows how much this will
impact
and other emerging markets - but overall, they will
probably continue
to exhibit reasonable growth.
Illiquidity in the markets is a continuing concern; but the
future risk will clearly be demand-led inflationary pressure, particularly in
energy, commodities and food prices.
We remain alert to the risks, but we also see opportunity
ahead. We will continue to invest in more markets and businesses where we
expect sustainable long-term growth, in line with our strategy.
Chief Executive of HSBC Holdings plc,
said:
probably the toughest in my 35 years of banking
when, for the first time, I have witnessed banks not
trusting each other, to the ext
ent that they were not prepared
to lend to each other. At times like this, our
defensive qualities stand us in good stead.
But the current environment has created opportunities as
well as challenges, and I will update you shortly on how we have been managing
HSBC, for shareholders' benefit as well as customers'.
When I joined the bank, in 1973, I was quickly taught some
very basic, but very important, banking principles and these were:
to a healthy banking business
and the confidence of depositors.
as having too much capital - be strong, be
liquid.
A balance sheet is just a
in time, and is not a substitute
for truly knowing, and understanding, your
customer.
And finally - since no one gets everything right all of the
time - own up to what is not right, learn from experience, and fix it
I, and my colleagues, have used those guiding principles
throughout our careers, across the world, and I can confirm that they are as
strong today as they were in 1973. Let me reinforce, what Stephen
said.
Since the credit crisis started, HSBC has seen unprecedented
increases in customer deposits. And this is because we have remained very
strongly capitalised, with both Tier O
We have been criticised in the past for having too much
capital
But people now recognise the v
alue of our capital strength.
People have remembered that banks, more than any other
business, should not gear themselves up to an unhealthy extent.
and core deposits are now back in fashion - they never
were out of fashion with HSBC.
Another of our fundamentals is
know our customers, rather than just relying on rating
agencies and audited ac
counts, to assess credit risk.
It was because we know our customers, and we know our
assets, that we announced last autumn that we would restructure our SIVs, and
be alongside our customers, in the underlying investments in these
funds.
Our clients have recognised
this commitment - where others
have walked away. We've had a significant increase in
business - taking it
who were more fair-weather bankers.
Finally, your management tells it to you as it
is
and well before some others do. Here in the UK, we
called
the top of the property market
at the end of 2006, and purposely gave up market share
as we were not prepared to become lax, in either our credit standards or our
pricing.
with pricing and conditions being more realistic, we
are back in the market, assisting our personal customers when others will not
continue to finance them. You may recently have seen that we have stepped into
the market, with offers to help those people impacted by the withdrawal of
fixed rate facilities by others.
we advised the market that we were expecting
significant deterioration in sub prime lending, we have remained very
focused.
You will recall that we have taken a number of actions to
resolve the issues.
The first is discontinuing various businesses, including
wholesale and correspondent originated mortgages
I take personal charge, and
it would take us three years to deal with the
problem.
Since the beginning of the year, outstandings have
come
in this portfolio from nearly
on working down the exposure.
In the meantime, the vast majority of our customers
continue to repay us, with
coming from customer repayments.
Turning to our branch-based consumer finance business, we
have now reduced the network by 400, to around 1,000 branches. A full review of
this business has also been carried out and
although this business remains challenging, over time
pricing power will emerge.
Our US credit card business, which is broadly 50 per cent
prime and 50 per cent non-prime, continues to remain profitable, and we are now
running our cards business worldwide, as one global business, with HSBC Finance
leading the consolidation.
We are now a top-five global card business, and this is
one
of our first global products, under our
housing downturn, HSBC Finance's contribution to the
Group has been broadly break-even. The additional capital we have put in is
less than the dividends we have taken throughout our period of
ownership.
On the point of whether we hold appropriate levels of
provisions for the business - the simple answer is yes. And we have been
building provisions for the last eight quarters.
You should rest assured that management and the Board have
looked at every option
available to recapture value.
is that the best approach is to work out the troubled
part of this portfolio of assets.
You have my commitment to continue to be hands-on, and
resolve matters, for the benefit of the shareholders in the shortest possible
period of time.
Turning to the rest of the world, our businesses are
experiencing particularly strong growth
Profit before tax is up over 40 per cent, minus dilution
gains, and our Mainland China business passed the
billion dollar profit before tax milestone.
The
- another record year, an
other billion-dollar business.
erlying growth of 14 per cent.
2 billion profit before tax. These results more than justify
the strategy of being a well-spread, global bank with strong and balanced
business flows.
As I said when I became Group CEO, the challenge for us was
to
in the 83 countries and territories that we operate
in.
Joining Up a company of this size is, of course, complex,
but it is rewarding for all
It is a long journey that we have set off on, but there has
already been much success - and let me just highlight a few examples.
There are reported to be over 100 million people who either
regularly travel the world,
move home internationally
Premier Proposition with a globally recognised
personal account.
million of these very important customers by 2011, and
we are
on the way, with 2.3 million.
During the first quarter, Premier customer numbers increased
by nearly 100,000 - of which approximately three quarters were new to the
Group.
In Commercial Banking, we are the world's largest
international ban
k, with 2.8 million customers.
And through our Global Links system we have linked all our
global relationship managers, around the world, so that we can assist these
customers across borders.
In 2007, Global Links doubled the number of successful
cross-border referrals for our commercial banking customers, with
an aggregate transaction value
We are only, at the beginning - our strategy, is to be at
both ends of customers' trade and investment transactions, wherever possible.
In the
we are testing an innovative, new concept for our
small business customers. Our Online Business Network is aimed at start-ups and
new businesses, linking customers with each other, and providing access to
expert HSBC resources online. Our vision is to roll out the initiativ
to customers across the world, to create a
global
online business community.
Turning to Global Banking and Markets. Being emerging
markets-led and financing-focussed has meant that we have been able to use our
mature markets' people skills to do a lot mor
in emerging markets. This focused alignment has
resulted in us winning many emerging markets banking awards, including, Best
Risk Management House - both globally and in Asia - and best Foreign Exchange
House in Asia for the 10th consecutive year.
Private Banking and Insurance are now far more focused
around our customers, and the growth in both channels has come about from
Joining Up Insurance and Private Banking, with around 120 million Personal
Financial Services customers.
Joining up the Company is not just about writing more
business; it is also about
that we improve the customer experience, and we listen
to our staff, on a daily basis.
stantly talk to our customers.
We monitor our customer service across the world, via direct
feedback, and through mystery shopper analysis
Wherever customers and non-customers interact with our
distribution centres
be they branches, call centres or the internet - we
get unbiased feedback that is recorded
And we talk to our staff. In August last year we held our
first, global Staff Engagement survey, where nearly, 88 per cent of all
staff
. An unprecedented number, according to the consultants who
arranged this first annual survey.
We are listening to staff and we are focusing on a nu
in 2008. And I will discuss the progress of these
initiatives
, with over 30,000 of my colleagues, when the 2008 Global
CEO Roadshow takes place in September.
The scores for staff satisfaction, customer recommendation
and
brand value are part of my
and the Group Management's Board's
We radically streamline our underlying processes, around the
needs of our customers, automating as many manual processes
in the process. This is an enormous challenge, and
requires us to develop common systems for common products and services on a
global basis.
We are doing this with much success. We recognise that it is
challenging and not without risk, but we do believe in the long run this will
differentiate HSBC
and the financial reward will be seen through the cost
income ratio.
As I said at the beginning, a tough year but a rewarding
year and I would like to close by thanking all my 330,000 colleagues who get up
each day and give their all to make HSBC the world's local bank.
HSBC Holdings plc serves over 12
million customers worldwide through around 10,000
offices in 83 countries and territories in Europe, the Asia-Pacific region,
the
. With assets of some US$2,
2007, HSBC is one of the world's largest banking and
financial services organisations. HSBC is marketed worldwide as 'the world's
local bank'.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HSBC Holdings plc
By:
Name: P A Stafford
Title: Assistant Group Secretary
Date:
May 30, 2008