News Archive 2007

Grupo Financiero HSBC, S.A. de C.V. Fourth Quarter 2006 Financial Results â?? Highlights

27 February 2007

On 8 August 2006 HSBC Panama was sold by Grupo Financiero HSBC S.A de C.V to HSBC Asia Holdings BV. All comparative commentary within this report is therefore on a like-for-like basis excluding HSBC Panama as presented in Appendix A. The financial statements on pages 6-14 include HSBC Panama up until the date of disposal.

• Net income up 8.4 per cent to MXN5,365 million for the year ended 31 December 2006 (MXN4,949 million for the year ended 31 December 2005).
• Cost efficiency ratio (excluding monetary position) of 60.6 per cent for the year ended 31 December 2006 (65.1 per cent for the year ended 31 December 2005).
• Return on equity of 18.6 per cent for the year ended 31 December 2006 (21.8 per cent for the year ended 31 December 2005).
• Net loans and advances to customers up MXN28.1 billion or 22.1 per cent to MXN154.9 billion at 31 December 2006 (MXN126.8 billion at 31 December 2005).
• Total assets up MXN22.6 billion or 8.5 per cent to MXN290.3 billion at 31 December 2006 (MXN267.6 billion at 31 December 2005).

HSBC Mexico S.A. (the bank) is Grupo Financiero HSBC S.A. de C.V.'s (the group) primary subsidiary and is subject to supervision by the Mexican Banking and Securities Commission. The bank is required to file periodic financial information on a quarterly basis (in this case for the quarter ended 31 December 2006) and this information is publicly available. Given that this information is available in the public domain Grupo Financiero HSBC S.A. de C.V. has elected to file this release.

Results are prepared in accordance with Mexican GAAP (generally accepted accounting principles) with figures denominated in Mexican pesos (MXN). Comparative figures are presented on an actual basis indexed to constant MXN as at 31 December 2006.

Grupo Financiero HSBC S.A. de C.V. is a 99.99 per cent directly owned subsidiary of HSBC Holdings plc (HSBC).

Comment by Sandy Flockhart President and Group Managing Director of Latin America and the Caribbean

"Our investment for growth strategy in Mexico continues to deliver solid results. For the year ended 31 December 2006 the group delivered robust growth in revenues. Net income was driven by a strong performance in the bank and in the insurance subsidiaries despite higher loan impairment charges in line with the provisioning requirements under Mexican regulatory rules to cover significant loan growth. Revenue grew across the personal commercial and corporate business segments even in a decreasing interest rate environment and a highly competitive market. Our cost efficiency has shown continued improvement with revenue growth of 17.0 per cent exceeding expense growth of 8.8 per cent in the period ended 31 December 2006. This has been due to a more profitable balance sheet composition driven by growth of 42.2 per cent and 37.0 per cent in consumer and commercial banking lending products respectively compared to 2005. Impaired loans grew 21.5 per cent versus the previous year in line with 21.8 per cent growth in gross loans and advances to customers for the same period. As a result the ratio of impaired loans to total loans remained at 2.7 per cent as at 31 December 2006 the same percentage as the previous year.

"In 2006 Grupo Financiero HSBC consolidated efforts to grow a strong platform in Mexico. Our commitment to Mexico is reflected by our continued investment since the acquisition of Grupo Financiero Bital in November 2002. HSBC has invested over US$2.3 billion in Mexico since 2002. As part of HSBC Mexico's plans to increase financial strength and to become the leading financial services company in Mexico in the eyes of our customers all profits earned since January 2003 have been reinvested in the Mexican business representing a total of MXN15940 million in accordance with Mexican GAAP. We have invested in enhancing our information technology improving staff training and broadening the human resources base to some 23700 employees. This represents over 8000 new jobs created since November 2002 and over 2000 new jobs in 2006 alone. The training and career development of our employees including offering overseas postings has been integral to building local leadership talent and potential for continued growth in the future.

"In April 2006 HSBC Mexico inaugurated its new headquarters Torre HSBC which has brought together staff across Mexico City into one location providing a stronger organisational culture and a renewed working environment. In addition to our new corporate headquarters we have continued to invest in and improve our infrastructure with 372 ATMs added in 2006 bringing the total number to 5437.

"I am pleased to mention that during 2006 Grupo Financiero HSBC received several awards not only for its managerial efforts but also for its corporate and social responsibility. Expansión and Latin Finance magazines each named HSBC Mexico as Bank of the Year in 2006. In May for the second consecutive year HSBC Mexico received the SME Award from the Mexican Ministry of Economy in recognition of its outstanding support to small and medium business customers.

"In the area of social responsibility the Mexican Philanthropy Centre (CEMEFI) recognised HSBC Mexico with the Socially Responsible Company 2006 certification. Likewise HSBC ranked first among all Mexican banks and fourth in Latin America in the Sustainable and Ethical Banks in Latin America ranking published by Latin Finance magazine.

"In HSBC we continue to strive towards being the leading financial services company in Mexico. The combination of our extensive international network the HSBC brand and the sharing of global practices along with local product knowledge and expertise has been a powerful impulse to deliver solid results in Mexico."

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