#104721 157% 1.230 61.8175 0420 0.80% 01325 021% 82.230 1.250 150% 16.370 0.340 203% 39.500 0340 0.87% 16.310 38.900 62.748 0412 065% N 1.570 4.300 0.96% NA 440 0130 80% 570 0.010 17% 1.0331 755% 07825 215% 14 MA HISBE HSBC Brazil Citi Roadshow March 2nd, 2010 HSBC Conrado Engel David Kotheimer Alvaro Azevedo CEO HSBC Brazil Deputy CEO HSBC Brazil CFO HSBC Brazil HSBC ☑ The world's local bank#2Forward-looking statements This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and businesses of HSBC Bank Brasil (HBBR). These forward-looking statements represent HBBR's expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Additional detailed information concerning important factors that could cause actual results to differ materially is available in HSBC Holdings plc's Annual Report and Accounts. 2#3Contents Economic Environment 04 Financials 2009 Strategy 2010 - 2012 Market Share 08 80 10 14 3#4Economic Environment HSBC The world's local bank#5Brazil is one of the most relevant emerging markets globally and the largest economy in Latin America Brazil is an important emerging market... Brazil is the 10th largest economy in the world; Macro stabilization coupled with high commodity prices led to >5% GDP growth in 2007 and 2008. World's Largest Economies (Dec 08) . And dominant economy in Latin America Brazil is the largest economy in Latin America and accounts for 37% of the region's GDP. Latam's Largest Economies (Dec 08) GDP USD bn GDP per capita USD 1 United States 14.265 46.859 2 Japan 4.924 38.559 Brazil 3 China 4.402 3.315 Mexico 4 Germany 3.668 44.660 5 France 2.866 46.016 Argentina 6 UK 2.674 43.785 Italy 2.314 38.996 Venezuela 8 Russia 1.677 11.807 9 Spain 1.612 35.331 Source: IMF and World Bank 10 Brazil 1.573 8.197 11 Canada 1.511 45.428 12 India 1.210 1.016 13 Mexico 1.088 10.235 Source: IMF and World Bank Note: 2009 Brazil GDP is not available. GDP USD bn % LATAM GDP 1.573 37% 1.088 26% 326 8% 319 8% 50#670% 65% 60% 55% 50% 45% 40% 35% 30% Dec-06 Feb-07 Apr-07 Source: Brazilian Central Bank External Solvency Indicators Consumption/employment provide support for demand 2002 2009 International Reserves (USD bn) - liquidity 37.8 239.1 International Reserves (USD bn) - cash 238.5 External Debt expiring in the next 12 months (USD bn) 1 58.6 52.8 External Debt expiring next 12 months / Reserves (cash) 155% 22% External Debt/ Reserves (cash) 557% 85% External Debt / Exports 349% 132% External Debt Services / Reserves 131.9% 18.4% 1) Includes amortizations of medium and long term debt expiring in the next 360 days. Source: Brazilian Central Bank Evolution of Public Debt Jun-07 Aug-07 Oct-07 Net Public Sector Debt/GDP Gross Public Sector Debt/GDP Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 2 Apr-09 Jun-09 Aug-09 Oct-09 Structurally Resilient A resource rich country, with a closed economy; exports=14% of GDP, and diversified in geographical terms; Strong external solvency ratios and floating FX regime prevent speculation against the BRL; Household consumption is 61% of GDP; government consumption is 20%; Banking system well capitalised and regulated; credit market funded by BRL liabilities; Still an underleveraged economy; 2008 credit/GDP= 42% vs 81% in Chile and 226% in the US; Mortgage volumes are very small compared to the economy, at circa 2% of GDP; Fiscal results in good shape despite recent deterioration, which translated into a rise of debt/GDP. 6#7Consumption/employment provide support for demand Retail Sales MoM s.a. 170.00 160.00 150.00 140.00 130.00 120.00 110.00 100.00 90.00 Source: IBGE Jan-00 00-inг Jan-01 40–ՈՐ Jan-02- Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08- Monthly Unemployment Rates 14 13 12 11 10 9 8 7 - 80-IՈՐ Jan-09- 6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: IBGE -60-inc Demand Holding Firm Real income (+19% in the last 4 years) protected by falling inflation; There have been neither bubbles nor wealth destruction, so households have been protected; 2009: Unemployment peaked in April; net formal job creation returned to positive since February; Average unemployment for 2009 was 8.1%, only +0.2% from 2008's 7.9%; 2004 2006 2008 2009 Companies and unions promoted agreements in order to preserve jobs in exchange of less hours worked; -o-2010 Confidence indexes have already reverted to the upside, and are gaining momentum. 7#8Financials - 2009 results HSBC The world's local bank#9Financial Overview Summary of reported results - Profit before tax US$m Personal Financial Services Commercial Banking 2008 2009 250 (224) % change 2009 vs 2008 (189.6)% 348 211 (39.4)% Global Banking and Markets 298 515 72.8% Private Banking Other Total Notes: Source: HSBC Annual Report & Accounts 2009 8 5 (37.5)% 6 3 (50.0)% 910 510 (44.0)% 6#10Strategy 2010 - 2012 HSBC The world's local bank#11Strategy 2010 - 2012 Niches to grow... Build on relationships Leverage global capabilities in Commercial Banking and Global Banking and Markets Premier and Gold/Advance business propositions Focus growth in Business Banking and keep market share in Mid Market Enterprises and Large Local Corporate Leverage global presence – increase share of wallet with select customer base Core consumer finance Low cost model proposition for middle income customers Leverage the use of direct channels Refocus geographically Capital injection of USD 600 million provides strong platform for growth 11#12Strategy 2010 - 2012 This is how we will compete Be the customers' preferred Bank with focus on international businesses Global Banking + Local Large Corporate Private TOP 3 local Private Banking leveraging global capacity and local cross sell Target companies in selected sectors who generate larger returns and cross- referrals for PFS Middle Market Enterprises Premier / Advance Increase market share enhancing our distribution and excellence in services Business Banking Retail Build the best Premium Bank through excellence in services and international scope Generate scale in PFS exploring upwardly mobile customers and optimizing the usage of direct channels. 12#13Strategy 2010 - 2012 An upwardly mobile population requires that we segment customers and offer differentiated propositions Notes: Source: IBGE - PNAD 2007 | Income (annual in R$) Financial Assets Population Economically Active More than 1 million AAA 37 k More than 100 k A 900 k From 50 to 100 k B 2.3 millions From 15 to 50 k C 14.7 millions From 5 to 15 k D 40.8 millions E Less than 5k 40.2 millions 13#14Market Share HSBC The world's local bank#15Some relevant market share Demand Deposits Time Deposits Funds Dec 20092 4.9% 9.7% 5.0% Personal Financial Services (individual loans) 4.2% Commercial Banking (loans) 3.7% Forex1 Custody of Assets¹ Debt Capital Markets1 Pension Funds¹ Notes: (1) Forex, Custody of Assets, DCM and Pension funds are one month delayed. Source: Brazilian Central Bank, ANBID, Bovespa, BM&F, HSBC Insurance website, Susep, Febraban 13.8% 14.2% 6.3% 5.7% 15