HSBC 2012 Annual Report Download - page 6

HSBC HOLDINGS PLC
Report of the Directors: Overview (continued)
Group Chairman’s Statement
4
Group Chairman’s Statement
2012 was a year of considerable progress in
delivering on the strategic priorities which the Board
has tasked management to address. Our decision to
focus on reshaping the Group through targeted
disposals and closures and internal reorganisation is
paying dividends. It is bringing greater clarity and
focus and is delivering sustainable cost savings
while allowing incremental investment to be
available and directed towards the areas of greatest
opportunity.
This progress is all the more notable given that
during 2012, the banking sector, including HSBC,
faced continuing and in many ways unprecedented
challenges. Banking has been given a huge wake-up
call and we are determined to play our part in
restoring its reputation and thereby regaining
society’s trust. Thus our restructuring agenda is not
only justified economically but is helping the Group
shape its response to the media, the regulatory and
political challenges, and societal expectations which,
simply put, all revolve around restoring the trust of
all stakeholders. From depositors to investors,
regulators to employees, public policy makers to
consumer lobbyists we need to ensure the business
model of banking is fair, transparent, sustainable
and meeting its core objective of serving society.
Never has it been more important to put the
customer first and provide the means and support
to help them fulfil their financial aspirations and
ambitions. That is our prime purpose and one of
which we should never lose sight.
Over the last two years the Board was exercised
greatly by the major US regulatory and law
enforcement investigations we faced. I covered the
background to these investigations, settlement of
which we reached in December, in our Interim
Report.
Management is now delivering the required
enhancements to our control framework and on top
of this we have significantly augmented the Board’s
oversight and governance capabilities. This is dealt
with in more detail below.
Encouragingly, there is now growing external
recognition of the progress being made in delivering
against our stated strategic priorities. This, together
with our overweight exposure to the world’s more
attractive economies, contributed to a total
shareholder return of 39% over the year – 7%
from dividends paid and 32% from share price
appreciation. Over the course of the year the market
capitalisation of HSBC grew by US$58bn from
US$136bn to US$194bn, returning shareholders
once again to the position where their company is
worth more than its contributed capital. We
remained among the highest dividend payers in the
FTSE 100, a performance which we know is of great
importance to our shareholders.
The cover to this year’s Annual Report again
illustrates our strategy of connecting customers and
markets. The scene depicted is the cargo terminal at
Hong Kong International Airport, which has been
ranked as the busiest airport for international air
cargo since 1996. Today the airport’s trade
throughput represents over one third of Hong Kong's
external trade. HSBC’s connection with trade
financing and trade services through Hong Kong
goes back to our earliest days and remains one of our
core strengths. Projections of trade growth in Asia
and Hong Kong’s role therein reinforce our
investment focus in this area.
Performance in 2012
There was much to be positive about in HSBC’s
performance in 2012. The majority of our core
businesses in Asia, particularly in Hong Kong,
continued to perform well, achieving good
underlying revenue growth in the year. Increased
market confidence around eurozone recovery
contributed to a significant turnaround in Global
Banking and Markets results in Europe. Targeted
disposals and the continuing run-off from our exit
portfolios in the United States, together with
evidence of recovery in many housing areas were
reflected in significantly lower US loan impairment
charges.
Progress in managing costs to reflect a lower
economic growth environment in developed markets
was encouraging. Offsetting these positive factors,
credit demand remained muted throughout Europe,