Citi HK Financial mini-conference

Transcription

1 31 May 2011 Hong Kong, The Roles of RMB Internationalisation Citi HK Financial mini-conference Mark McCombe Chief Executive Officer Hong Kong The Hongkong and Shanghai Banking Corporation Limited

2 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 future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Additional detailed information concerning important factors that could cause actual results to differ materially is available in our Annual Report and Accounts Past performance cannot be relied on as a guide to future performance. This presentation contains non-gaap financial information. Reconciliation of non-gaap financial information to the most directly comparable measures under GAAP are provided in the Reconciliations of reported and underlying profit before tax supplement available at 1

3 RMB to be the third largest international currency 2

4 Rise of Greater China Significant economic benefits for Hong Kong People China has over 9mn mass affluent, growing at 13% CAGR. 825k individuals with wealth over RMB10mn 4 Spending power spilled over to HK In 2010, 22.7mn Mainland tourists to HK and 16.1mn to Macau 6 accounted for 30% of luxury retail sales 1 Trade China is the largest exporting country USD1.5tn total exports in Will surge to around USD2.4tn in Robust HK/China trade 53% exports/44% imports of HK to/from China 5 Capital China GDP USD 5.7tn GDP in 2010, 2 nd largest in the world 8 Currency China engages in active foreign asset acquisition and continued domestic infrastructure spending Strong capital flow between China and HK 45% of overseas projects in China are HK related 2 Targeting full convertibility Reserve currency? RMB internationalisation 592 Mainland companies listed in HK 7 1. Business Week. Dated April Tourism Commission, Hong Kong SAR; China Tourism Academy 2. World Trade Organization 7. HKEx Fact Book, Ministry of Commerce, PRC 4. HSBC estimates 8. CIA - The World s Factbook 5. Census and Statistics Department, Hong Kong SAR 3

5 China is now the 2 nd largest economy and largest exporting country (USDtn) Gross Domestic Product (USDtn) Total Exports US China Japan Germany France China Germany US Japan Source: 1. IMF / CIA The World s Factbook 2. CIA The World s Factbook 4

6 RMB could become the 3 rd highest turnover currency in the world if RMB is fully convertible Daily Avg Turnover (USDbn) Daily Avg Turnover (USDbn) 3500 USD 3000 USD EUR RMB GBP YEN EUR RMB GBP YEN BIS Data 0 HSBC estimate (if RMB fully convertible) Note: Estimate of RMB daily average FX turnover is based on a turnover-to-trade ratio of 0.3, which is lower than 0.32 for EUR, 0.4 for YEN and 0.46 for GBP. The rise in use of RMB will offset the use of USD, EUR, YEN and GBP at a share of 40%, 30%, 20% and 10%. Source: HSBC estimate 5

7 RMB internationalisation Rapid development Trading Currency Investment Currency Reserve Currency HSBC forecast Personal RMB business RMB bonds RMB trade settlement pilot scheme Enlarged trade pilot scheme RMB wealth management products Overseas Direct Investment in RMB Fully convertible??? Access to Mainland s bond market Case approval of RMB FDI Source: HSBC 6

8 HK the launch pad for China companies Going Out China s ODI continues to grow USDbn 2010 Non-financial ODI: USD59bn China is now the 5 th largest ODI origin 2 China is no longer only a FDI destination. It is now the 5th largest ODI origin 2 HK is PRC s largest ODI destination 1 56% of new company accounts opened in Hong Kong are customers from China 3 Growth in SOE/POEs using the liquidity in the Hong Kong system USDbn HKD AD ratio: 78.1% 4 Non-bank China exposure: 12~13% HK banks assets USA France Japan Germany China Statistical bulletin of China s outward foreign direct investment 2. National Bureau of Statistics of China 3. HSBC figure 4. HKMA statistics 7

9 RMB Trade Settlement to reach USD 2 tn by 2015 Full liberalisation by % of Hong Kong traders would use RMB for trade settlement in the coming 6 months. 2 RMB is expected to be the third most popular currency for trade settlement. 2 More than USD 2 trillion or half of China s total trade flows with emerging markets will be settled in RMB by 2013 to RMB to become a fully liberalised currency by HSBC in-house estimates 2. HSBC Trade Confidence Index MAY

10 HK s RMB deposits to reach RMB 800bn by end 2011 Or 11% of Hong Kong s deposits 1,200 RMB bn Strong 1, RMB deposit pool 1Q2011 end: RMB 451bn or 5% of total HK deposits base Base RMB800bn to RMB1.2tn by end of Weak Dec07 Dec08 Dec09 Dec10 Dec11e Source: CEIC, HSBC 9

11 Expanding leadership in Hong Kong 10

12 Sustained leadership through the economic cycle HSBC position Leading player with # 1 market shares Ability to generate profits through the economic downturn Hong Kong PBT USDbn, Reported 5.5 HSBC only Hong Kong Deposits (Dec 10) 25% 34% Mortgages 2 (Dec 10) 19% 34% HKD Bonds (Dec 10) 34% 34% Key actions Continue to invest to maintain leadership 1 Top advertising spend (15% of industry) with # 1 in Brand Health USD1.4bn IT and delivery channel spend over past three years Build new leadership segments 1 # 1 in life insurance new business 18.1% and Mandatory Provident Fund 24.8% market share Building ECM capability. Best Equity House 2010 by Finance Asia Continue advances and deposits growth USDbn, Reported CAGR (08-10) Deposits % Advances % A/D ratio 40% 36% 47% 1 HSBC excluding Hang Seng Bank, 2 mreferral data 11

13 Ideally positioned to capture cross-border opportunities Chinese diaspora: a major source of new customers 1 Key actions 3 Premier Total new accounts % 77% Higher Value Lower cost Business Total new accounts % 44% Chinese diaspora key behaviours Chinese diaspora Others Higher take up of wealth management products Bigger transaction value More use of direct channel Tend to use one bank only Leveraging on cross-border connectivity to capture commercial clients 35% of new locally incorporated companies in HK bank with HSBC Commercial Banking referrals HK to mainland: +25%; mainland to HK: +70% Strengthening sales force to capture retail clients Recruited 1,500 frontline staff (70% Mandarin speaking) 112% YoY growth in new Chinese diaspora Premier accounts 2 Premier referrals HK to mainland: +332%; Mainland to HK: +150% 1 Companies Registry, HKSAR / HSBC in-house figures, all excluding Hang Seng Bank 2 FY HSBC excluding Hang Seng Bank 12

14 HSBC - The leading international RMB Bank Hong Kong RMB deposits vs. RMB trade settlement 1 RMBbn, cumulative RMB bn CNH Bond new issuance forecast 3 RMBbn Sep f 2012f 2013f Gross issuance Net issuance Redemption 1 HKMA; 2 HSBC in-house figures (exclude Hang Seng Bank) 3 Bloomberg Dec-09 Mar-10 Jun-10 Total RMB trade settlement value Sep-10 Dec-10 HK RMB deposits Mar-11 Key actions Leveraging on first mover advantage Joint-Listing Agent on HK s first RMB IPO First RMB structured deposits. Launched RMB insurance, RMB Bond Fund Pioneered Offshore RMB (CNH) Bond Index Capitalising on international connectivity to further increase market share 2 HK s RMB deposits estimated to rise threefold in 2011 RMB bond issuance: #1 Rank YTD Issuance includes World Bank, Unilever, etc. RMB trade services in 45 markets on all 6 continents, settlement volume reaches RMB45bn FY

15 HSBC is playing a leading role in developing offshore RMB business Product capability First-mover Provider of Choice Distribution channel Convenience Replicating overseas Global platform Connectivity Building Awareness 14

16 HSBC leading in Offshore RMB bond issuance 1 Q offshore RMB bonds issued 2 Red: Deals led by HSBC Pricing Issuer Rating Amount Coupon Synthetic Date Issuer Moody's S&P Format Tenor (RMB mn) (%) (Y / N) 31-Mar-11 Towngas A1 A+ Sr. Unsec. 5yr 1, N 29-Mar-11 China Wind Power - - Sr. Unsec. 3yr N 25-Mar-11 Unilever NV A1 A+ Sr. Unsec. 3yr N 24-Mar-11 Bank of Communications A3 BBB+ Cert. of Depo. 3yr 1, N 21-Mar-11 OCBC Aa1 A+ Cert. of Depo. 3yr N 15-Mar-11 Orix Corp - A- Sr. Unsec. 3yr N 14-Mar-11 TPV - - Sr. Unsec. 3yr N 10-Mar-11 Morgan Stanley A2 A Sr. Unsec. 5yr 400 Step Up Y 9-Mar-11 UBS AG Jersey Branch Aa3 A+ Sr. Unsec. 5yr Y 8-Mar-11 Powerlong Real Estate B1* B+ * Sr. Unsec. 3yr Y 1-Mar-11 Barclays Bank PLC HK Aa3 - Cert. of Depo. 1yr N 28-Feb-11 Bank of Communications A3 BBB+ Cert. of Depo. 2yr 1, N 21-Feb-11 Road King Infratructure Ba3 * BB- * Sr. Unsec. 3yr 1, N 20-Feb-11 ICBC (Asia) A2 A- Cert. of Depo. 2yr 3, N 18-Feb-11 LDK Solar Co Ltd - - Sr. Unsec. 3yr 1, Y 15-Feb-11 UBS AG Jersey Branch Aa3 A+ Sr. Unsec. 5yr Y 16-Feb-11 Svenska Aa2 AA- Sr. Unsec. 2yr N 14-Feb-11 BECL Investment HLDG - - Sr. Unsec. 3yr 1, N 28-Jan-11 ICBC (Macau) A3 - Cert. of Depo. 1yr 1, N 28-Jan-11 ICBC (Macau) A3 - Cert. of Depo. 2yr 1, N 27-Jan-11 YFY Cayman - - Sr. Unsec. 3yr N 25-Jan-11 IFC Aaa AAA Sr. Unsec. 5yr N 25-Jan-11 PCD Store - - Sr. Unsec. 3yr N 25-Jan-11 HSBC Bank Plc Aa2 AA Sr. Unsec. 5yr Y 25-Jan-11 Morgan Stanley A2 A Sr. Unsec. 5yr 400 Step Up Y 19-Jan-11 Shui On Land - - Sr. Unsec. 4yr 3, Y 13-Jan-11 Evergrande B2 BB- Sr. Unsec. 3yr 5, Y 13-Jan-11 Evergrande B2 BB- Sr. Unsec. 5yr 3, Y 11-Jan-11 Sinochem Hong Kong Baa1 BBB+ Sr. Unsec. 3yr 3, N 7-Jan-11 China SCE Property Holdings B2 B Sr. Unsec. 5yr 2, Y 4-Jan-11 World Bank Aaa AAA Sr. Unsec. 2yr N 3-Jan-11 Bank of Communications A3 BBB+ Cert. of Depo. 2yr N 1. Bloomberg Standard League Table. As of YTD end April HSBC in-house records 3. Issue ratings 15

17 HK launched the first offshore RMB equity IPO Paved way for more issues in the future Launched on 19 April 2011, the first RMB equity IPO outside mainland China HSBC as Joint-Lead Arranger and Receiving Bank Expanded RMB product suite. A way to deploy RMB liquidity in HK Upcoming RMB FDI (Foreign Direct Investments) policy will drive more RMB IPOs 16

18 Product and Service Distribution Providing convenience; replicating overseas Providing Convenience Business Internet Banking supporting RMB transaction since Jul ,000 commercial banking integrated accounts with RMB capabilities RMB cash withdrawal available at ATMs in Hong Kong Replicating overseas Business Internet Banking supporting RMB transactions. RMB cash withdrawal now available. RMB Retail Banking services offered in 9 Asia Pacific markets 17

19 Developing global platform RMB capabilities established in over 40 markets across all 6 continents Russia Canada USA Mexico El Salvador Panama Bermuda Brazil UK Germany Poland Kazakhstan Switzerland Czech Slovakia France Georgia Spain Italy Armenia Turkey South Korea Greece Israel Japan Saudi Arabia UAE Bangladesh India Hong Kong Thailand Macau Philippines Vietnam Malaysia Brunei Singapore Indonesia Mauritius Paraguay South Africa Australia Chile Uruguay Argentina New Zealand Updated: 30 April 2011 Red: RMB Trade Transaction Completed Black: RMB Trade Transaction In Progress 18

20 Promoting awareness overseas Overseas Roadshows Regional Advertisement A recent RMB Roadshow in Istanbul, Turkey: 11 th May

21 Key takeaways Opening of China is an opportunity, not a threat HK reinforcing its position as the logical gateway into China Rapid rise of RMB and its eventual full convertibility shifts the dynamic in HK HSBC has the ideal international platform - product capability and distribution - to capture the opportunity 20

22 Contact Mr. Hugh Pye Head of Investor Relations Asia-Pacific HSBC Holdings plc L38 HSBC Main Building, 1 Queen's Road Central, Hong Kong Phone: Fax: Mobile: hugh.pye@hsbc.com 21