CEO`s Message

Dear Customer,

The HSBC Group has navigated the global economy extraordinarily well in 2011 in spite of the unpredictable world economic climate, and was awarded the accolades of Global Bank of the Year as well as Regional Bank of the Year in Asia Pacific, by the prestigious magazine – The Banker. HSBC remains one of the largest global financial services companies with one of the highest credit ratings (Moody’s Aa2/ S+P A+) and a Tier 1 capital ratio of 10.6% and a loan/deposit ratio of 76% (as at 30SEP11), Hence you - our customers can have confidence when you entrust your funds to HSBC, in these uncertain global economic times.

In Sri Lanka too, we had a successful year and emerged stronger in terms of growth and market shares as well as performing well in all key areas of business.

We hope you have enjoyed the many privileges of being an HSBC customer, whilst we appreciate the privilege of being the bank of your choice and being able to serve you.

Our efforts to satisfy you with a world class service in Sri Lanka were also recognized by entities such as Finance Asia, Euromoney, Global Finance and locally by The Ceylon Chamber of Commerce. The accolades we won in 2011 in Sri Lanka were:-

• Best Consumer Internet Bank for the 6th consecutive year – Global Finance, 2011
• Best Corporate/Institutional Internet Bank, Global Finance, 2011
• Best Sri Lanka bond deal, Finance Asia, 2011
• Top Ten Best Corporate Citizen’s Award, Ceylon Chamber of Commerce, 2011 (for the 6th time)
• Winner - Community relations and CSR Category at the best Corporate Citizens Awards, Ceylon Chamber of Commerce, 2011 ( for the 1st time)

Throughout the year, many new initiatives and promotions were launched in our Retail Banking and Wealth Management business. Our HSBC Premier customers now enjoy a gamut of exclusive privileges, both at home and away, which is best in class. HSBC Advance customers too now enjoy many privileges and convenient banking. Further, many novel and rewarding credit card offers were extended to you throughout 2011 such as `Winner Every Minute`, `Nail It` and `Cash Back`. We are also pleased to advise that over Rs.100 million has been awarded to our customers on the HSBC Rewards programme in 2011. HSBC cards continue to lead the market with approx. 27% of cards in force and over 45% of all credit card spending in Sri Lanka.

On personal loans, our innovative 11/11/11 loan campaign in November attracted record levels of loan applications and we are pleased to report that our delinquency rates are one of the lowest in the market.

For added convenience in transacting, and to serve you better, we have extended our third–party network extending to over 1000 outlets, with the option of settling your credit card bills at Arpico Supercentres and Keells Supermarkets, amongst others.

We also expanded our branch network by opening the seventeenth branch in Galle in July. The branch is making steady progress exceeding our expectations with regards to both deposits and advances and has contributed towards the development of socio–economic fabric in the southern part of the country.

Our Corporate Banking and Global Banking & Markets divisions also had a good year, driven by new business as well as by maintaining a leaner business model. HSBC successfully concluded the first Chinese currency / RMB import transaction in the market for a major garment manufacturer. HSBC continues to be the only bank with a local presence to be mandated as Co/Lead Arranger to the highly successful Govt. of Sri Lanka USD 1 Billion / 10 year sovereign bond, issued in July 11. The deal went on to win the `Best Sri Lanka Bond Deal` awarded by Finance Asia for the second consecutive year, once again showcasing our supremacy in this space in Sri Lanka.

Broadening and strengthening our presence in the local lifestyle and culture scene, we joined hands with Galle Literary Festival for the first time. With this tie up, we are now title sponsors of two of the biggest and most sought after international events in the Sri Lankan calendar; HSBC Galle Literary Festival in January 2012, and HSBC Colombo Fashion Week in February 2012. We are indeed very happy to support initiatives of this nature which helps to build Sri Lanka’s image on the world’s stage

Our Corporate Sustainability activities are focused around education and the environment. In this context we were pleased to launch the HSBC Youth Enterprise Awards together with the British Council, which provided a platform for young people to create new business innovations and more importantly make it viable through seed capital provided for the winners. We also witnessed the completion of the IT Scholarship Programme in partnership with Microsoft and Sarvodaya, whereby 500 scholarships were awarded to deserving students in the Northern, Eastern, Southern and Western Provinces. We continued as the main sponsor, in partnership with the Council for Business with Britain and the British Council, on the English Language Teacher Training Project aimed at improving the teaching of English in rural schools.

In addition, the Bank organized many new programmes during the year, which included the Vesak Lantern Competition at the Beira Lake; the first ever Staff Photography Exhibition at the Lionel Wendt Theatre; Christmas with 250 orphans on the Jetliner ship and many more. Our staff contributed their time in record volumes during the year, resulting in 15,000 volunteer hours of staff engagement in these programmes.

All these efforts and our commitment towards creating a more sustainable future, was justly recognised when HSBC Sri Lanka won the best Corporate Citizens Award under the Community Relations and CSR Category in the Top Ten Best Corporate Citizens Awards in 2011, for the first time.

In retrospect, the year 2011 has been an embodiment of achievement and profitability for the Bank in both Colombo and the Maldives to which you, our customers, have contributed invaluably.

HSBC succeeds when our customer’s succeed, and you can rest assured that we will work even harder in 2012 to facilitate your financial requirements, be it personal, corporate or institutional. And so, on behalf of myself and all my colleagues at HSBC Sri Lanka and the Maldives, I would like to thank you for your loyalty and assure you of our best services during 2012 and for many years to come.

Nick A Nicolaou
Chief Executive Officer Sri Lanka and Maldives HSBC