HSBC Holdings plc AGM

HSBC Holdings PLC
25 May 2001


           HSBC HOLDINGS PLC ANNUAL GENERAL MEETING

The following is a statement given by Sir John Bond, Group
Chairman, HSBC Holdings plc, at the Annual General Meeting
held at the Barbican Hall, London, on Friday, 25 May 2001.

Those of you who attended this meeting last year may have
noticed that there are some new faces on the stage. It is a
great pleasure to introduce them to you.

First Charles de Croisset and Sir John Kemp-Welch. Charles is
the Chairman and Chief Executive Officer of CCF. And Sir John
is a former Joint Senior Partner at Cazenove & Co, and a
former Chairman of the London Stock Exchange. Both were
appointed on 1 September 2000 and their re-election is
proposed at this meeting.

Also I am pleased to introduce to you Sharon Hintze and Sir
Mark Moody-Stuart who were appointed as non-executive
directors with effect from 31 March, and, again, whose re-
election is proposed at this meeting. Sharon has held senior
executive positions with Nestle and Mars. And Sir Mark is the
Chairman of Shell Transport and Trading.

I would like to pay tribute to the two directors who retire
today, Sir Peter Walters and Denys Connolly. Sir Peter has
been Deputy Chairman since 1993; he also served as Chairman of
Midland Bank. Denys served on the board of The Hongkong and
Shanghai Banking Corporation from 1985 to 1997 and on this
board since 1990. He has been Chairman and a long-serving
member of the audit committee. Both have made a major
contribution to HSBC and I thank them for their long and
outstanding service.

HSBC has always been blessed with a board of the highest
calibre. Their talent and experience is a very real competitive
advantage to us.

One director, Lord Butler, extends his apologies to you for
not being here today. As Master of University College,
Oxford, he is today hosting a visit by former President of the
United States Bill Clinton and is unable to attend this meeting.

I would like to thank you for coming here today. This meeting
is an opportunity for our owners to review HSBC's performance
during 2000.

And 2000 was a year when HSBC made significant progress. Let
me start with the headline figures.  Pre-tax profit on a cash
basis up 28 per cent to US$10,300 million. Profit attributable
on a cash basis up 31 per cent to US$7,153 million.
Earnings per share on the same basis grew 23 per cent to 81 US cents.

Cash earnings exclude the impact of goodwill amortisation
arising from acquisitions and give a clearer indication of the
performance of our business. So we see them as the best
indicator of both the underlying performance of the Group, and
of our dividend paying capacity.

We have increased our total dividend for the year by 28 per
cent to 43.5 US cents to reflect the increase in our attributable
profit on a cash basis. Over the last five years, HSBC has paid
dividends of over US$13 billion. Over the same period we have
also contributed over US$8 billion in taxes paid.

There are three areas of progress that I would highlight from
2000.  Three areas but with one theme: building for long-term growth.

First building new businesses for the future.

2000 was a year when we planted as well as harvested. Capital
and revenue invested totalled US$1.6 billion, of which US$700
million was used to grow our customer base, build new delivery
channels and create new products and services.

For example, we met our target in Hong Kong with some 633,000
individuals, who may not have had pension provision before,
now enrolled with HSBC for their Mandatory Provident Fund
provision.

In e-commerce we launched internet banking in six more
markets; we now have two million online users in over 150
countries and territories.

Today our joint venture, Merrill Lynch HSBC, is live with a
full service for self-directed investors in the UK, Canada and
Australia. Early indications are encouraging. You can see a
demonstration of the service in the foyer outside as well as
other information on HSBC's international capabilities.

And while on matters electronic, this year for the first time,
a number of shareholders have submitted their proxies through
the internet. We hope that this number will increase. And
later in this meeting we will be asking shareholder approval
for a resolution which will amend the Articles of Association
and allow shareholders, if they wish, to receive shareholder
communications electronically.

The second area of progress is integration. A significant
part of our energies in 2000 was devoted to the smooth
integration of the Republic and Safra businesses, and of CCF
which joined HSBC in July last year.  I am pleased to report
these have gone well.

The former Republic branches in New York have been renamed and
integrated into our branch network there. HSBC now has a very
visible presence in New York. Cost savings are on track.
There was negligible customer or deposit attrition in the
commercial bank and our private banking operations have
expanded, growing the number of customers we serve and the
funds they entrust us to manage. HSBC Republic is now firmly
established as a world-class global private banking brand.

The integration of CCF, a highly-respected French bank, is
also going very well. We are confident of achieving our
target for synergy benefits of EUR150 million after tax in
2001. We have already seen benefits in terms of increased
revenues and favourable customer reaction. As a result of the
high take-up of HSBC shares rather than cash in our
acquisition of CCF, we issued US$8.6 billion worth of shares.

The third area we have invested in is reducing the price of
key services to our customers thereby increasing the value of
the HSBC brand. In the UK, for example, our variable rate
mortgage promise, introduced in July last year, is always to
keep our variable mortgage rate within one per cent of Bank of
England base rate. We also made sure the benefits were
received by existing as well as new customers. In the What
Mortgage awards, HSBC won Top National Bank Lender over two
and ten years, for the third year running.

While I am talking about the UK, if I may digress for a
moment, the foot and mouth epidemic has damaged many
businesses - in tourism, leisure, food, transportation and
construction.  I would like to extend our sympathy to all
those affected and, as the grandson of a farmer who lost his
farm, particularly to the many farmers enduring a truly
dreadful time. HSBC Bank has a long history of supporting
agriculture in this country and we will make every effort to
support our customers.

HSBC's Total Shareholder Return for the first two years - that
is 1999 and 2000 - of our strategy of 'managing for value' was
203 per cent, compared to 136 per cent for the TSR benchmark
of our competitors. Clearly the fall in the share price after
we announced our results in February was disappointing but we
still remain ahead of our peer group benchmark, as well as
having outperformed the Footsie in the UK, the Hang Seng Index
in Hong Kong, the Stoxx 50 in Europe and the Standard & Poors
500 in the US over the last year.  And let me place it in a
longer-term context; over the last 30 years HSBC has achieved
a compound annual growth rate in net profit of 21.9 per cent.

When we announced our results for 2000, we described the
outlook for 2001 as 'challenging', a remark which clearly
caught the attention of the media and other commentators.

It is the HSBC way to describe the business prospects as we
see them and not as we might wish them.  It has become
increasingly evident that the US economy is indeed
experiencing a marked slowdown. Many companies, particularly
in IT and telecoms, have announced significant reductions in
the number of people they employ.  What is not so clear is how
long this will continue or how it will affect other economies,
particularly in Asia.

Of course, there are some bright spots around the world:
China's continued economic growth and, perhaps, signs that
Japan may be restructuring its economy. But 2001 does indeed
promise to be a challenging year for the global economy and a
testing time for the financial services industry.
Nevertheless, what I also said in February - and unfortunately
this was not so widely reported - was that, historically, HSBC
has responded well to such challenging conditions. Indeed, if
there is any organisation that likes a challenge, then it is
HSBC.

Let me reiterate what I said then. We have the advantages of
a strong brand; our internationalism gives us a major
competitive advantage. With our traditional strengths of a
conservative balance sheet, high liquidity, and a strong
capital base, we are well placed to seek out, and take
advantage of, the opportunities which undoubtedly will arise.

Trading conditions during the first three months of 2001 were
in line with the challenging environment we forecast when we
announced our full year 2000 results in February and against
which we have positioned our business.  In these economic
conditions customer demand for financial products,
particularly in equity related activities, has reduced as have
quality lending proposals, so growth opportunities remain
muted. The trend in our net interest margin remained broadly
in line with that experienced during 2000 reflecting a growing
but more liquid balance sheet and careful management of our
cost of funds. Close attention continues to be given to
costs. Credit quality remained stable but, with weakening
economic conditions, progress in recovering historic problem
loans is likely to be slower this year. Given the reduction
in US interest rates so far in 2001, investment portfolio
adjustments have realised a number of disposal gains which
have augmented venture capital and other investment disposals.
The Group's liquidity position and capital ratios remain
strong.

HSBC can be characterised as a successful financial services
organisation. Let me say a few words in defence of success.
HSBC operates in 79 countries and territories and it is our
experience that you cannot sustain a successful economy
without a strong and healthy banking system.

Banks can play an important part in helping to make people's
lives better by supporting their financial needs, and in
nurturing and developing businesses which create wealth. HSBC
aims to do just that.

HSBC is a business with a sense of responsibility. We have a
responsibility to you, our shareholders, to provide you with a
first-class investment.  We have a responsibility to provide
outstanding service for our customers. We have a
responsibility to our staff to make HSBC a safe and pleasant
place to work.  And we have responsibilities to other
stakeholders in the community. Success helps us to fulfil our
responsibilities.

It also means that we can share that success with others less
fortunate. There is nothing new in this. We have always
shared our success. But for a long time HSBC did not feel the
need to talk about the work we do in the community. In
today's world, that is changing; people want to know more
about what we do and what we believe.

So, increasingly we are making explicit what previously was
implicit. For example, in addition to our Statement of
Business Principles and Values, first published in 1999, we
have adopted the United Nations Global Compact and the Global
Sullivan Principles, two internationally-recognised codes for
responsible corporate behaviour.

We recognise that we can always do more, but we believe that
we have a good story to tell. Our annual review of 2000
contains an essay entitled, 'a sense of responsibility' which
highlights some of the good work HSBC and its staff does
around the world. And we have provided you today with a copy
of our new brochure, 'HSBC in the Community'. In the foyer
outside this hall, there are a number of displays showing
some of the work we are doing.

Large international companies like HSBC are often portrayed as
abstract entities implacably engaged in the single-minded
pursuit of profit. My experience of HSBC is very different.

I have 170,000 colleagues around the world, the vast majority
of whom care deeply about having a decent environment for
themselves and their families and friends. Many of my
colleagues give very generously of their time and energy to
good causes around the world.

Our charitable donations have grown from US$11 million in 1998
to US$17 million in 1999 to over US$24 million in 2000. Money
is important, but it is not the only thing. We take great
care to ensure that our donations create real benefits for
people and causes that need them, and not just publicity for
us. That is our character.