HSBC 2010 Annual Report Download - page 12

HSBC HOLDINGS PLC
Report of the Directors: Overview (continued)
Principal activities / Strategic direction / Top and emerging risks / KPIs
10
Principal activities
HSBC is one of the largest banking and financial
services organisations in the world, with a market
capitalisation of US$180bn at 31 December 2010.
We are headquartered in London.
As ‘The world’s local bank’, we combine the
largest global emerging markets banking business
and a uniquely cosmopolitan customer base with
an extensive international network and substantial
financial strength.
HSBC operates through long-established
businesses and has an international network of some
7,500 offices in 87 countries and territories in six
geographical regions; Europe, Hong Kong, Rest of
Asia-Pacific, the Middle East, North America and
Latin America.
Our products and services are delivered through
two customer groups, Personal Financial Services
(‘PFS’) and Commercial Banking (‘CMB’), and two
global businesses, Global Banking and Markets
(‘GB&M’), and Global Private Banking (‘GPB’).
PFS incorporates the Group’s consumer finance
businesses, the largest of which is HSBC Finance
Corporation (‘HSBC Finance’).
Taken together, our five largest customers do
not account for more than 1% of our income.
We have contractual and other arrangements
with numerous third parties in support of our
business activities. None of the arrangements is
individually considered to be essential to the
business of the Group.
There were no significant acquisitions during
the year (for details of acquisitions see page 340).
Strategic direction
Our objective is to deliver sustainable long-term
value to shareholders through consistent earnings
and superior risk-adjusted returns.
Our strategy is to be the world’s leading
international bank, by:
• leveraging the HSBC brand and our network of
businesses which covers the world’s most
relevant geographies. This network provides
access to the world’s fastest growing economies,
for example Greater China. We serve companies
as they grow and become more international and
individuals as they become wealthier and
require more sophisticated financial services,
such as wealth management; and
• competing as a universal bank across the full
financial services spectrum only where we have
scale and can achieve appropriate returns. This
implies building scale in attractive geographical
regions and businesses where we can be
competitive and reviewing businesses which do
not meet our financial hurdles.
The strategy reflects the key trends which are
shaping the global economy. In particular, we
recognise that over the long term, developing
markets are growing faster than mature economies
and connectivity continues to increase as world trade
is expanding at a greater rate than gross domestic
product, generating increased demand for financial
services. We are, therefore, continuing to direct
incremental investment primarily to the faster
growing markets and client segments which have
international connectivity. In order to deliver this
strategy we pursue a series of initiatives, reflected
in the Group’s key performance indicators:
• enhance efficiency by taking full advantage of
local, regional and global economies of scale, in
particular by adopting a common systems
architecture wherever possible;
• maintain capital strength and a strong liquidity
position. Capital and liquidity are critical for our
strategy and are the foundation of decisions
about the pace and direction of investment; and
• align objectives and incentives to motivate and
reward staff for being fully engaged in
delivering the strategy.