30 May 2008
At the Annual General Meeting of HSBC Holdings plc, held today, the Group Chairman, Stephen Green, said:
"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 certainly the worst for a generation. It has claimed many casualties 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 banks, 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:
Being positioned in fast-growing markets;
Having good customer relationships based on fairness;
Running efficient operations; and
A strong capital base and balance sheet.
"These are the signature strengths of your company. I certainly don't 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.
"But, the fact is, HSBC has never pushed the financial envelope. We have always looked for sustainable profit growth, based on 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 remains 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 China - where we continue to invest to support our position as the leading international banking presence. It's true in India, where we are building out in banking, securities 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."
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