HSBC 2006 Annual Report Download - page 7

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United States Securities and Exchange Commission,
summary financial statements to shareholders, proxy
statements, offering circulars and prospectuses, press
releases and other written materials, and in oral
statements made by HSBC’s Directors, officers or
employees to third parties, including financial
analysts.
Forward-looking statements involve inherent
risks and uncertainties. Readers are cautioned that a
number of factors could cause actual results to differ,
in some instances materially, from those anticipated
or implied in any forward-looking statement. These
factors include, among others:
• changes in general economic conditions in the
markets in which HSBC operates, such as:
– changes in foreign exchange rates, in both
market exchange rates (for example,
between the US dollar and pound sterling)
and government-established exchange rates
(for example, between the Hong Kong
dollar and US dollar);
– volatility in interest rates;
– volatility in equity markets, including in the
smaller and less liquid trading markets in
Asia and South America;
– lack of liquidity in wholesale funding
markets in periods of economic or political
crisis;
– illiquidity and downward price pressure in
national real estate markets, particularly
consumer-owned real estate markets;
– the impact of lower than expected
investment returns on the funding of private
and public sector defined benefit pensions;
– the effect of unexpected changes in
actuarial assumptions on longevity which
would influence the funding of private and
public sector defined benefit pensions;
– continuing or deepening recessions and
employment fluctuations; and
– consumer perception as to the continuing
availability of credit, and price competition
in the market segments served by HSBC.
• changes in governmental policy and regulation,
including:
– the monetary, interest rate and other
policies of central banks and other
regulatory authorities, including the UK
Financial Services Authority, the Bank of
England, the Hong Kong Monetary
Authority, the US Federal Reserve, the US
Securities and Exchange Commission, the
US Office of the Comptroller of the
Currency, the European Central Bank, the
People’s Bank of China and the central
banks of other leading economies and
markets where HSBC operates;
– expropriation, nationalisation, confiscation
of assets and changes in legislation relating
to foreign ownership;
– initiatives by local, state and national
regulatory agencies or legislative bodies to
revise the practices, pricing or
responsibilities of financial institutions
serving their consumer markets;
– changes in bankruptcy legislation in the
principal markets in which HSBC operates
and the consequences thereof;
– general changes in governmental policy that
may significantly influence investor
decisions, in particular markets in which
HSBC operates;
– other unfavourable political or diplomatic
developments producing social instability or
legal uncertainty which in turn may affect
demand for HSBC’s products and services;
– the costs, effects and outcomes of
regulatory reviews, actions or litigation,
including any additional compliance
requirements; and
– the effects of competition in the markets
where HSBC operates including increased
competition from non-bank financial
services companies, including securities
firms.
• factors specific to HSBC:
– the success of HSBC in adequately
identifying the risks it faces, such as the
incidence of loan losses or delinquency, and
managing those risks (through account
management, hedging and other
techniques). Effective risk management
depends on, among other things, HSBC’s
ability through stress testing and other
techniques to prepare for events that cannot
be captured by the statistical models it uses.