HSBC 2012 Annual Report Download - page 13

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Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
We have also introduced a new filter, against
which all existing and prospective clients and
businesses are screened. This sixth filter focuses
on financial crime risk. It means that where we
cannot practically or economically apply the global
standards to which we are committed we will stop
writing business altogether or significantly restrict
our activities. This policy is consistent with our
commitments to adopt global standards, to simplify
our business and operations, and to de-risk our
business activities.
Implementing these standards will be a critical
component of our work in 2013.
Outlook
Whilst the operating environment for financial
institutions remains difficult, our core business will
continue to reap the benefit of recovering economic
growth in mainland China and its positive impact
on other faster-growing regions. We expect the
developing economies, led by mainland China, to
continue to grow briskly at 5.4%, while developed
economies should see more gradual growth of 1.0%.
We forecast growth of 8.6% in mainland China
in 2013.
The US economy should continue its gradual
recovery, with continuing quantitative easing
measures supporting a recovery in the housing
market, although the recovery is still not strong
enough to support a sustained reduction in
unemployment. We expect higher growth in Latin
America in 2013, due in part to a modest recovery
in Brazil. The biggest risk to the world economy
remains an uncharted shock from Europe and an
exacerbation of the sovereign debt crisis. We remain
cautious on the outlook for Europe due to weak
demand, slow growth, and political and regulatory
uncertainty.
Finally, I am pleased to report that the business
had a good start to the year. Our results in 2013
will include a dilution gain of US$1.2bn on our
investment in Industrial Bank, following its issue of
additional share capital to third parties on 7 January.
There was also a US$0.6bn net gain on the
completion of the sale of our shares in Ping An,
which offsets the adverse fair value movement on
the forward contract included within our 2012
results. On 19 February 2013 we announced the
sale of our operations in Panama for US$2.1bn.
S T Gulliver, Group Chief Executive
4 March 2013