AGM Statement

HSBC Holdings PLC
27 May 2005


                    HSBC HOLDINGS PLC ANNUAL GENERAL MEETING

The following is a statement given by Sir John Bond, Group Chairman, HSBC
Holdings plc, at the Annual General Meeting held at the Barbican Hall, London,
on Friday, 27 May 2005.

Today is an opportunity for our shareholders to review HSBC's progress. 2004 was
another good year for the Group and we were able to build on the record results
of 2003. We grew profit attributable to shareholders by 35 per cent to US$11.8
billion. Earnings per share were up 30 per cent and total dividends for the year
were US$7.3 billion. Our earnings growth was well diversified across all our
main geographical regions and our customer groups. In addition, we have
continued to invest in the long-term future of our business. For the record, we
have achieved an 82 per cent increase in pre-tax profits and a 63 per cent
increase in EPS over the last two years.

At a time when equity markets remain subdued it is worth noting that, while the
FTSE100 has declined by 18 per cent since we first embarked on our Managing for
Value strategy in 1999, the HSBC share price has increased by 62 per cent.
Looking at it another way, if you had invested £100 in HSBC in 1975 and
reinvested the dividends it would now be worth £64,885 - a compound annual
growth rate of 24 per cent over the last 30 years.

HSBC manages its business through annual operating plans and five year strategic
plans but we also try to identify the major influences on our industry over the
next quarter of a century. In our assessment, there will be three.

First, we believe that there will be a rebalancing of the world economy. A much
higher proportion of total world GNP will be contributed by the "so-called"
emerging markets. Countries such as China, India, Brazil and Mexico are becoming
increasingly important on the world economic stage. Hence the significance of
our highly successful investment in Mexico in 2002. Hence too the importance of
the US$3 billion we have already invested in China. This includes the 19.9 per
cent interest we acquired during 2004 in Bank of Communications, China's fifth
largest bank. Earlier this month and subject to regulatory approvals, we
announced our intention to invest a further US$1 billion in China to increase
our stake in Ping An Insurance, China's second largest life and third largest
non-life company, to 19.9 per cent.

Secondly, demographic trends will be a major influence. We expect that, in most
of the developed world, the ratio of people in retirement to those in employment
will continue to increase, intensifying the need for pensions and retirement
related services. To give an example of how this trend directly affects our
business in the UK, a one year increase in longevity adds about £300 million to
our pensions liabilities. By contrast, emerging markets will experience rising
incomes, and the growth of new consumer markets will create demand for all kinds
of consumer financial services.

Thirdly, the internet is a transforming technology which has the ability to
change the relationship between financial services companies and their customers
by giving people greater ability to perform their transactions themselves at
their convenience. This will result in major changes in the way that banks are
structured and, perhaps, in the human resources they require. At the end of
March 2005, 19.6 million customers were registered to use our internet services,
an increase of five million, or 34 per cent, in the last year alone. And in the
UK, while visits to branches are falling, internet visits are rising by 40 per
cent a year. Already over 50 per cent of customer contact is now made over the
telephone and the internet.

HSBC is responding in full measure to these profound influences and overall our
business is in good shape. We meet regularly with our major institutional
investors to discuss the progress we are making and the challenges we face. I
thought it might be helpful to shareholders attending this meeting if I were to
highlight two subjects which have been discussed frequently in recent meetings.

First, the performance of our consumer finance business in the United States.
Shareholders will recall that we acquired HSBC Finance Corporation, formerly
Household International, in the Spring of 2003 at a cost of US$14.8 billion.
Although consumer finance is not as well known here in the UK, it has a long
history and a good growth record in the US. Using highly sophisticated
behavioural analysis it caters for a range of customers, many of whom cannot be
accommodated by banks. At its best - and HSBC is determined to be the best -
consumer finance provides people who may not be able to borrow from banks with
access to credit in a responsible, transparent and fair manner. The HSBC Finance
Corporation model is highly acclaimed in the US.

The acquisition has been successful, the integration was completed ahead of
schedule and the resulting benefits have been somewhat greater than we expected.
In 2004 HSBC Finance Corporation made a record profit attributable to
shareholders of US$2.7 billion, a cash return on cash invested of 18 per cent.
It has pushed HSBC from 40th to one of the top six issuers of credit cards in
the world and to number three in store cards. It has also given us a consumer
finance skill set that previously we lacked and which we can extend into markets
such as China, India, Mexico and Turkey.

Secondly, we have been asked about our progress in building our corporate,
investment banking and markets business, which we commonly refer to as CIBM.
HSBC already has one of the world's largest corporate and institutional banking
businesses. In more recent years we have enjoyed conspicuous success in
developing a global markets business. It is true to say, however, that we had
not enjoyed the same degree of success in our equity capital markets business.
Nor were we a truly significant force in investment banking advisory. A
strategic review of those businesses, supported by extensive research, led us to
conclude that there was ample scope for a trusted name which could provide high
calibre equity capital markets and investment banking advisory services. Our
major corporate customers assured us that they would like to do more business
with us if we could extend the range and quality of certain services.

Accordingly, in 2003 we embarked on a five year plan to build CIBM as an
integrated business and, having considered carefully and discarded the
possibility of a major investment banking acquisition, we decided to build new
business streams organically and at a total cost of less than three per cent of
our total expenses. We recognise that markets are always impatient for evidence
of progress but HSBC is a long-term business which thinks long-term and invests
for the long-term. We remain confident that the course we have set for ourselves
is right for us and that, given active markets, the people we have recruited
will in due course produce revenues which are multiples of their direct and
indirect costs. Furthermore, we believe that the demand for the sophisticated
services which our CIBM business offers will grow rapidly outside the
established centres of London, New York and Hong Kong and in markets such as
mainland China, India and South America. We will continue to keep shareholders
informed of our progress.

It is a tradition, and an entirely correct one, for Chairmen to pay tribute to
their colleagues at the AGM. HSBC cannot be successful without the talents, hard
work and dedication of our people so many of whom constantly stand ready to go
the extra mile. I take this opportunity to thank them warmly for their massive
contribution to the company's standing in our industry.

It is precisely because our employees are such an asset to HSBC that it is
saddening to have to comment on the current industrial dispute in the UK. Allow
me to set out the facts as clearly and succinctly as I can.

HSBC's policy is to pay fairly. We pay competitive market rates and we reward
performance based on merit. We do so at all levels of the organisation and in
every country where we operate.

At the end of 2004, the UK accounted for 22 per cent of our worldwide staff but
for 31 per cent of our total staff costs, 52 per cent of our total pension costs
and 36 per cent of our total social security costs. Over the last three years we
have made two top-up payments to our UK pension fund totalling £584 million. We
have also increased contributions to the scheme to 20 per cent of pensionable
salary. We are now paying an additional £1,000 a year to secure the retirement
benefits of a typical member of our clerical staff who is in the defined benefit
pension scheme.

HSBC employs a total of 55,000 staff in this country, of whom 25,180 are
clerical staff. 10,519 of those are union members. Less than 30 per cent of
members voted and of those, over 30 per cent voted against the strike. This
means that only four per cent of our total staff in the UK voted to strike.

When we were determining the appropriate amount of our 2005 pay award,
independent research confirmed that some 60 per cent of our clerical staff are
on better than market salaries. We therefore decided that we should channel pay
rises to those on lower salaries to bring them up to market levels. The large
majority of staff have received a bonus. Only one per cent of our staff received
no pay rise and no bonus and most of them because of unsatisfactory performance.

Our dispute with the union is about those who have received no rise, or a rise
less than inflation. It is in essence, therefore, a dispute about HSBC's policy
of paying market rates and rewarding performance. We recognise the right of
employees to take strike action. However, it is deeply regrettable that four per
cent of our staff would vote for action to disrupt customer service and
potentially damage our business. I thank the 96 per cent of our colleagues who
are hard at work today to ensure that all our branches remain open.

At last year's AGM I spoke in detail about the role of your Board and its
importance to HSBC. I shall not therefore do so again although I would like to
thank the members who, individually and collectively, contribute so much to
HSBC's success. As usual there have been some changes to the composition of the
Board since our last meeting.

Carole Taylor retired with effect from 14 March this year following her decision
to stand as a candidate for the Provincial Legislature of British Columbia in
Canada. Carole was an outstanding director and HSBC's loss is British Columbia's
gain.

William Aldinger retired on 29 April having overseen the integration of HSBC
Finance Corporation into the enlarged HSBC Group. Bill had agreed at the time of
the acquisition to stay on for a period of three years to oversee this process
and it is a tribute to his energy and leadership that it was completed faster
than planned.

David Eldon retires today after a very distinguished career of 37 years with
HSBC. His contribution has been immense. He has led our business in Asia through
some challenging years and he has helped to lay the foundations of our future in
mainland China. He has also overseen the continued development of our commercial
banking business around the world, a vitally important customer group for HSBC.

I am pleased to welcome to today's meeting two new directors who were appointed
to the Board in March, John Coombe and James Hughes-Hallett. John recently
retired as Chief Financial Officer of GlaxoSmithKline plc. James is Chairman of
John Swire & Sons Limited.

One of many areas where we look to our directors and others for support and
guidance is the area of Corporate Social Responsibility. We are grateful to the
distinguished members of our Corporate Social Responsibility Committee for
helping us shape and enact policies and programmes and for encouraging us to
communicate these more effectively than in the past. We published a summary of
our progress in our 2004 Annual Review. Copies of a full Corporate Social
Responsibility Report, for the specialists, and a short brochure, for the
general reader, are also available. Important though this area is, therefore, I
shall not comment on it at length today. However, I would like to highlight some
particularly important initiatives:

In 2004 we announced our commitment to becoming carbon neutral by 2006. We were
the first major bank to do so.

Secondly, shareholders will recall that at our meeting last year we announced
the publication of a new internal guideline on lending to the forestry sector.
We have today published a new guideline, this time on lending to the freshwater
sector. Copies are available at www.hsbc.com.

Education and the environment remain our principal areas of philanthropic
support. In addition, we contributed both locally and at a Group level to
appeals for funds for relief and reconstruction in south east Asia, in response
to the appalling tragedy of the tsunami last December.

When we reported our 2004 results in February, I drew attention to the prospects
for economic growth in Brazil, India, Mexico, South Korea, Turkey and the Middle
East. I also highlighted the increasing importance of China in the world
economy. We have continued to see the emergence of these markets in the first
part of 2005 and we are making encouraging progress in developing our personal
and commercial businesses in them.

Progress in our major developed markets has also been broadly favourable. In the
United States, recent trends in employment and payroll data suggest that the
economy is sustaining momentum. The credit experience of our US consumer finance
business continued to improve.

In Hong Kong, the economy is performing satisfactorily on the back of strong
trade, retailing and tourism. Consumer and corporate credit remain in good
health.

In the UK, we are continuing to make progress in developing our business.
However, recent rises in interest rates and a slowing residential property
market are affecting consumer confidence and the level of bad debts.

Our investment in developing our CIBM business has continued as planned, there
have been encouraging indications of growing client recognition of the progress
we are making.

Overall, the Group's results for the first quarter of 2005 are in line with our
expectations.

We believe that HSBC provides an excellent investment proposition. Our business
is unusually well diversified, both by customer group and by geography, giving
us a wide spread of risk. Our operations in 77 countries and territories
straddle virtually every area of growth and both mature and emerging markets. No
one region accounts for more than a third of our earnings. Our financial
strength underpins our ability to invest in the long-term growth of our business
and protects us against sudden economic volatility.

Although the world economy is growing more slowly than in 2004, we see
significant scope for HSBC to build its business. In the developed world, where
capacity exceeds demand, there will be further pressure on margins and
consolidation in the financial services industry. In emerging markets, however,
demand and deregulation will bring new opportunities for growth. We are
generating sufficient cash from our established businesses to respond to them.
Few, if any, financial services companies can match our international footprint
or would find it easy to replicate. We are pursuing our strategy for Managing
for Growth and in an increasingly open world there are exciting prospects for
the world's local bank.


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