CEO`s Message

Dear Customer,

2009 had been another successful year for HSBC in Sri Lanka and Maldives. The global financial crisis is working through the system and we are not yet out of the woods. However HSBC as always, has weathered the storm better than many of our peers, by operating our business on the basis of the Group’s very clear and long-held fundamentals of financial strength, liquidity and conservative gearing. With a market capitalisation of US$200bn (at 31Dec09), the HSBC Group is one of the world’s largest financial services organizations. With a tier one capital ratio of 10.3% (at 30Sep09) and a loan to deposit ratio of 79.5% (at 30Jun09), the Group remains one of the most strongly capitalized and liquid banks in the world.

In Sri Lanka, having opened our doors in July 1892, we have completed 117 years of service to our customers in this country. With a network of 14 branches, one Premier Centre and 17 Express Banking Centres, HSBC today is a leading financial institution in Sri Lanka’s banking sector that offers a broad range of banking and financial services tailored to meet a wide spectrum of needs, from those of multinational corporations to local businesses and individuals. We are delighted to announce the establishment of our 15th branch in Jaffna, which is scheduled to open on 11th February 2010. This will bring a truly global banking experience to the people of Jaffna and we are very much looking forward to participating in the vibrant post conflict economy that is developing there.

Despite the many challenges thrown at us during last year, we have reached many milestones in our business and received many accolades for our efforts. Globally, HSBC was voted Best Global Bank by Euromoney - in the height of the financial crisis. Regionally, among many other accolades, HSBC was named the Best Debt House in Asia by Euromoney and FinanceAsia. Locally, the Bank was voted the Best Cash Manager in Sri Lanka in the Euromoney Cash Management Poll and Best Corporate/Institutional Bank in Sri Lanka by Global Finance. All these awards are a testament to our resilience. By continuing to focus on the fundamentals of business and staying close to you, our customers, we can ensure that HSBC will continue to differentiate itself as the World’s Local Bank.

Our Personal Financial Business continued to provide customers with innovative and value packed offers through 2009. Starting with the Cardholder Dines Free promotion, and expanding to the Cardholder Stays Free and Flies Free offerings, the HSBC credit card once again provided customers with unbeatable value, which I am sure many of you'll would have had the opportunity to enjoy throughout the year. We ended the year with the World Spice food festival, which HSBC once again partnered with the Sri Lanka Tourism Development Authority. It was great to see this being held on the Galle Face green, and despite the inclement weather was a resounding success. We also entered into a very successful partnership with the National Savings Bank, in order to allow our customers to settle their credit card payments at NSB outlets islandwide, which helped us to further improve the convenience which we provide our customers. HSBC Premier continued to lead from the front offering exemplary customer service, and once again we held the ever popular HSBC 5 Club Stableford Golf Tournament at RCGC. We saw a large number of participants, and the overall winner was hosted by the bank, to witness the HSBC Champions Tournament in Shanghai in November 2009.

Our Commercial Banking and Global Markets businesses have thrived during the economic turmoil by supporting our relationship clients through difficult times and executing some landmark deals. HSBC remains the only bank with a local presence to be mandated as Co-Lead Arranger to the highly successful USD 500M sovereign bond issued in Oct09. We also facilitated over US$1bn of infrastructure lending in the power, water, harbour and telecom sectors during the past 12 months, cementing our place as a leader in the infrastructure space in Sri Lanka. We see the potential for many business opportunities especially in the newly liberated areas, and with our new Jaffna branch expect to be fully involved in them.

Our commitment to Corporate Sustainability remains and was reiterated with the launch of the first Future First Talent Show and Awards Ceremony for 300 underprivileged students from schools in and around Colombo. The event helped foster talent and was a celebration of children’s educational accomplishments. The Annual Christmas project with children from six orphanages got underway at Excel World with staff joining up and volunteering their time to make the event blissful and special for every child. Also, HSBC staff donated 1 days salary to help the IDPs , which was matched and increased by the Bank. As a result a total of Rps4.1m was donated for non food related items. Reiterating its commitment towards education, the Bank also entered into a partnership with Microsoft and Sarvodaya-Fusion to help build ICT skills of the youth in the North and East of the country, as well as continuing to support the English language training programme in partnership with the British Council and Council For Business With Britain. Similarly. concentrating on projects related to the environment, HSBC continues to work closely with the Department of Wildlife supporting national park clean ups and visitor education programmes and as a result has also agreed to sponsor the Siri Pada clean-up project during the forthcoming season.In addition, two of our branches namely HSBC Premier Centre and Male were converted to Green Offices.

The dawn of 2010 will no doubt bring forth many opportunities for local and foreign investors to set up operations in Sri Lanka in an environment conducive for the commencement of many mega infrastructure projects. We fully expect to participate in this economic upturn and remain firmly "open for business". 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 2010 and for many years to come.

Nick A Nicolaou
Chief Executive Officer Sri Lanka and Maldives HSBC