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Simplifying HSBCIUS Legacy Consumer Assets – Running offthe CML bookWe continue to run off US Legacyconsumer assets and are actively analysing opportunities toreduce risk and improve returnsRun-off Portfolio Receivables, USDbnVehicle Finance1Non real estate(unsecured)101Real EstateCAGR (21%)1116Sales79711587 Full sale of non-real estate portfolioshould be explored to reduceoperational risk495746120082009512010 Identifying segments of the realestate portfolio we may want toconsider selling that (i) representhigh risk and/or high operationalburden or (ii) may be sold on acapital accretive basis44Servicing Continuing to collect effectively andethically while focusing on expensecontrol and managing operationaland employee retention risks2011(1) Vehicle Finance sold in 3Q 201023

Simplifying HSBCIGB&M – GM Legacy hold vs. sell decisionstaken based on a clear economic frameworkDecision frameworkHoldExpected loss on sale Transaction costsNPV of future cash flowsSell NPV considers terminal value, net of funding and operational costs as wellas Cost of Capital Capital charge for projected RWAs assumes 10-15% Core Tier 1requirement Cost of Capital specific to GB&M; determined using various economicfactors Additional consideration for redeployment of capital24

Simplifying HSBCIFragmentation – We continue to use the five filters to drive furtherstrategic actionsWhat is the mentAre the currentreturns attractive?Resulting ansactions announced1InvestUS nueas isMedium/ LowNoDiscontinue/disposeRWAsUSDbnTransferred/ tobe transferredFTEs000’s26 Disposalsand Exitsc. 42c.13c.7.0c.8.0(1) 2011 FY and 2012 YTD25

Simplifying HSBCISimplifying the organisation and our approach to talent and valuesHow we will achieve it . . .8 by 8structureOrganisationFour globalbusinessesTen globalfunctionsTalentValuesCourageous Integrity Continue to establish 8x8 Maximum of 8 layers between Group CEO and frontline Increased spans of control (8 reports per manager) Target business and operating models beingimplemented across global businesses As we dispose and close non-strategic businesses,we are able to organise resources at the centreGroup FTE000’s(5%)2992851Q 111Q 12 Ten global functions (e.g. HR, Finance, Marketing) tomanage resources globally Easier to enforce global controls so that everygeography meets the highest standard Focus and visibility on our global talent pool Creating opportunities for talent as we change theorganisation Values programme, with courageous integrity as a guidingprinciple, led from the top and cascaded through theorganisation – ensuring global adherence to high standards Values fully integrated into performance management26

Simplifying HSBCIFour Programmes – A strong pipeline of actions to deliver againstthe cost targetUSDbnFour ProgrammesImplementconsistentbusiness modelsRe-engineerGlobal eSavings(Booked)10.2ConfirmedPipelineTotal(Booked &Pipeline)Targetby 20130.60.80.9Key actions inpipeline De-layering0.30.50.81.0 Procurement RBWM and CMBProductivity0.40.50.91.0 Process Reengineering Right-shoringStreamline IT0.30.30.60.6Total1.21.93.13.5(1) 2011 and 1Q 201227

AgendaRecap and progress on executionVision of HSBCPriorities going forwardIIIIIIISimplify Run off Portfolio fragmentation (Five Filters) Organisation, processes and proceduresRestructure Reposition elements of GPB business model Reposition US business GB&M structurally challenged productsGrow Integration of Global Businesses Capital commitment to priority growth markets28

RestructureIIGPB – Elements of business model to bere-positionedIndustry challenges Capturing new inflows fromfaster growing markets anddomestic businesses International businesses underincreasing regulatory scrutiny Overall pressure on profitabilityHSBC challengesBusiness model going forwardOperationalrisk andcomplianceIntegratedoperatingmodel ‘Federation of Private Banks’– Booking centre driven– Loosely integratedbusiness and operatingmodeland provide access to international investmentopportunities Implement new global operating model with betterintegration and coordination between regions Complete global roll-out of improved data securityand compliance systems and processes Intensify collaboration with CMB to accessIntegrationwith Group– Sub-optimal collaborationwith rest of the Group Reputational and financialdamage after 2010 data theft Adhere to the highest standards in the industry Continue to focus International on transparencyentrepreneur wealth creation Create seamless Group wealth proposition Focus investment on most attractive developed andCapturinggrowthfaster growing wealth markets where GPB can build on– Access to deep Group client franchise– Strong local and international product capabilities29

RestructureIIWe are reshaping the US business tofocus on core activitiesMajor US transactions announced to date Consideration: USD2.4bn Transferred FTEs: c.5kUS Cards andRetail Services RWAs: c.USD40bn1 Acquirer: Capital One Closed1stMay 2012 Consideration: USD1.0bn FTEs to be transferred: c.2kUpstate New Yorkbranches RWAs:c.USD2bn1 Acquirer: First Niagara Expected closing date: 2Q 2012Reposition the US towards internationalbusinesses Commercial Banking focused on 5 hubsconcentrating over 50% of US corporateimports/exports2 – California, Florida,Illinois, New York, Texas Global Banking serving top-tiermultinationals and Global Markets (NewYork) as a hub for international clientsacross Americas and world, leveraging USDfunding Retail Banking Wealth Management andGlobal Private Bank target internationallymobile clients in large metropolitan centres inthe West and East coast(1) As at 31st March 2012(2) International business opportunities were plotted by Metropolitan Statistical Areas (MSAs) and grouped into 5 key regions. These MSAs account for 52% of the international opportunity (Brookingsreport)30

RestructureIIGB&M – Industry is changing and facingprofitability challengesIndustry-wide structurallychallenged businessesIndustry changes in product profitabilityROE, %Pre-regulationPost regulation30FXc.12-1319Flow Ratesc.11-1215c.11-1220Commoditiesc.1125Flow EQD18Flow CreditStructured Creditc.1827Structured EQDStructured RatesIndustry challenges25Cash EquitiesPrime Servicesc.191517c.11c.10-11c.7-8 Client activity relativelysubdued with globalinvestment bankingrevenue pool forecastsfor flat to moderategrowth Regulatory changesreducing availablecapital and liquidity Overall downwardpressure on returnsc.7.810Source: McKinsey report “Day of Reckoning? New Regulation and Its Impact on Capital-Markets Businesses”, September 201131

RestructureIIGB&M – HSBC is well positioned for the newbusiness paradigmWhat matters going forward Deep clientfranchiseNetworkandproductcapabilities Access to deep anddiversified client base Network of markets coveringmajority of global financialflows Global product capabilities Diversified funding baseLiquidityandfunding HSBC GB&M execution progress 2011FastergrowingmarketsFinancingfocused 1Q 2012 vs 1Q 2011 PBTgrowth in Hong Kong (20%),Rest of Asia Pacific (17%),and Latin America (22%) DCM top 5 league tablepositions in Asia ex Japan,Europe and Latin America1 ECM initial success No. 2 inHong Kong1 CMB collaboration growth ofc.USD500m revenues in 2011Connectivity RBWM / GPB collaborationgrowth(1) Bloomberg32

GB&M regulatory challenged products represent 14% of total operatingincome1Challenged productsGB&M Total Operating Income2 ex. BSM and OtherAverage, USDmShare of 2011 TotalOperating Income, %Foreign Exchange3,00524%Financing & ECM2,98324%Rates1,87310%Securities services1,72912%PCM1,40311%Equities6947%Other transaction services5265%Asset and Structured Finance4074%Principal Investments2822%Credit-5012%Minimum, Maximum and Average 2007 – 2011, USDm(1) Excluding BSM and Other(2) Before loan impairment charges and credit risk provisions33

RestructureIIGB&M is taking the necessary actionsIndustry changes in product profitability Actively managing down legacy exposureGM Legacy In 2011, disposal actions taken to mitigate USD7bn RWAincrease; but RWAs increased USD24bn largely due toregulatory changes Clear economic framework for hold versus disposedecisions Comprehensive RWA mitigation actions underwayOngoing businessactions Trading inventory being managed down Optimising RWA consumption GM Rates – reposition in light of capital constraints. GMCredit – Primary DCM focused business going forward34

AgendaRecap and progress on executionVision of HSBCPriorities going forwardIIIIIIISimplify Run off Portfolio fragmentation (Five Filters) Organisation, processes and proceduresRestructure Reposition elements of GPB business model Reposition US business GB&M structurally challenged productsGrow Integration of Global Businesses Capital commitment to priority growth markets35

Organic GrowthIIIIntegration should deliver another USD1bnrevenue upside in the short to medium termCollaboration areasPrevious targetCMB and GB&MAdditionalpotential CMB andGB&MDescription Original collaboration target from May 2011 c.USD500m achieved in 2011Total upsideRevenues, USDbn1 Enhanced coverage of CMB clients Cross-selling of Trade & ReceivableFinance (GTRF) to GB&M customers Increased referrals between CMB and GPBCMB and GPBCMB andInsurance (RBWM)c.1 Cross-selling of Insurance (Trade Creditand Business protection)Total Upsidec.236

Organic GrowthIIIApart from regulatory increases, growth in RWAs focused ongrowth priority marketsRWA1 growth 2011 vs 2010USDbnNet RegulatoryRWA increase 50106Total Run-offGrowth-421 63We willcontinue todeploy RWAsin key marketsto drive growth293(7)17(0)43Home,GB&MGB&MGrowthex legacyLegacyNetwork and ex regulatory ex regulatorySmall markets increaseincreaseUS LegacyUS aseTotal RWAgrowth2010-11(1) Closing RWAs37

Organic GrowthIIIHSBC has been shifting towards faster growing regionsFast GrowersDevelopedFaster growing regions1 as share of Group2007, %PBTRevenues278%64%49%39%Gross loansand advances 24%to customersDeposits tocustomersHeadcount2007 – 2011 Difference, 2007 – 2011 Differencepercentage points2011, %38%41%48%57%63%100%14USD 1.6bn10USD 4.8bn14USD 125.7bn7USD 158.5bn6c. 1,800 FTE100%(1) Hong Kong, Rest of Asia Pacific, Middle East and North Africa, Latin America; (2) Net operating income before loan impairment charges and other credit risk provisions38

Key opportunities in Commercial BankingWorld Trade continues to grow faster thanGDP . . .World merchandisetrade2,USDtn30 The world's leading trade bank with 9% global marketshare1 International network covering 77% of world trade2and 81% of multinational companies3CAGR 20%24Distinctiveness35 Financing capabilities throughout the trade cycle Superior client franchise with over 3.6m clients Leading international bank for RMB products,providing capabilities in over 50 countriesWorld nominal GDP, USDtnCAGR 10%582009(1)(2)(3)(4)632010702011Key opportunities International revenue opportunity is growing at twice therate of domestic (19% vs 9%)4 Accessing faster growing markets and all major tradecorridors Capturing growth opportunities in trade finance ascompetitors deleverageGlobal market share by revenue, Oliver Wyman Global Transaction Banking survey 2011Global Insight 2011Dun & BradstreetInternational revenue pool 19% CAGR 2010-14 vs 9% domestic, McKinsey Global Profit Pool Study 201139

Key opportunities in Growth Priority MarketsAsia PacificMainlandChinaIndiaSingaporeLatin America Leading foreign bank for RMB in 2011 Debt and equity financing opportunities International desks driving Chinain/outbound business Largest branch network among foreignpeers Invest in accelerating growth ofinternationally-focused corporate franchise Expand distribution for retail opportunity RBS integration1 Develop Wealth management and PrivateBanking Expand Trade FinanceBrazilMexico Continue strong growth in CMB,particularly with international customers Drive collaboration revenues from CMB toGB&M, RBWM and GPB Capture Wealth Opportunity andaccelerate growth in Premier/Advance Leverage 1,000 branches to capture fairshare of lending in RBWM and BusinessBanking Grow Wealth Management business Drive corporate opportunity through GB&Mand CMB collaboration (FX, Trade, DCM)South – South Corridor 9% share of fast growing Brazil – China trade Recognised as ‘Financial institution of the year’ (2011) by the Brazil-China Chamber of Commerce for havingcontributed most to the growth and development of the trade corridor. Asia-Latin America desks in place to facilitate cross border business(1) Subject to regulatory approval40

Priorities going forwardKey actionsIIIIIISimplify Aggressively run-off legacy assets Fragmentation – Continue to dispose non-strategic businessesthrough Five Filters Four Programmes – Make HSBC easier to manage and controlRestructure Reposition elements of GPB business model Reposition the US for growth Review of GB&M challenges arising from regulatoryenvironmentGrow Integration – Capture an additional USD1bn in revenuesthrough Global Businesses coordination Active capital deployment in growth portfolio41

Report CardActions (examples)By the end of 2013 . . .Capital DeploymentFive Filters Release capital from run-off (CML, Additional transactions announced andexecutedGB&M) and non-strategicbusinesses RWAs increase in ‘Growth HSBC’ andmaterial reduction on Run-off businesses Mitigate regulatory RWA increase Continue to shift balance towards Progress in restructuring US businesses,Growth prioritieselements of GPB and GB&MSimplify HSBCFour Programmes Achieve USD3.5bn1 in sustainable savings Simplify and delayerorganisation, making HSBC easierrun-rate and target a 48-52% CERto manage and control Increase costs in faster growing markets Continue to invest in best-in-classwith positive jawsCompliance and operational risk Reduce controllable costs in developedcapabilitiesmarketsGrowth Invest in growth priority markets Grow loan, deposit volume and PBT inpriority growth markets Capture Wealth opportunity(USD4bn1 in additional revenues by Additional progress on Wealth and Global2015)businesses integration targets Continue to leverage integrationacross Global Businesses(1) Versus 2010 year end42

Our purposeThroughout our history we have been wherethe growth is, connecting customers toopportunities. We enable businesses to thriveand economies to prosper, helping peoplefulfil their hopes and dreams and realise theirambitions. This is our role and purpose.43

HSBC Merchant Services US cards US upstate NY branches General insurance Costa Rica, El Salvador, Honduras French regional banks Non-core UK card Serasa . Growth HSBC excludes US run off, GB&M legacy, US cards and retail services and non-strategic markets (excluding GB&M); (2) Excludes USD3.9bn change in fair value on own debt related to .