Bloomberg
HSBC flags $ 6 billion investment in Asia after profit
(Bloomberg) – HSBC Holdings Plc will move billions of dollars of investment from developed markets to the faster-growing economies in Asia, as it looks like it will become the bank for the rich in the region. largest bank said it would spend more than $ 6 billion over the next five years to expand its Asian operations, particularly its wealth management. This will scale down part of its investment bank. Adjusted profit before tax fell 50% to $ 2.2 billion in the fourth quarter, compared to an estimate of $ 1.8 billion, the bank said. HSBC will again pay a $ 0.15 dividend after British regulators relaxed a ban on capital preservation last year following the outbreak of the virus. The bank said it expects Asia’s share of group capital to rise from about 42% to more than half of the total within the next week. a move likely to be accompanied by the relocation of some of the company’s top executives from London to Hong Kong. “It makes sense to have more of the management team down there,” CFO Ewen Stevenson said in an interview with Bloomberg Television. “Fifty percent of our revenue, and most of our profits, now comes from Asia, and the pursuit of our growth aspirations is definitely in Asia.” The changes were less dramatic than some analysts had expected, and the bank largely adhered to cost-cutting plans that would reduce its workforce by about 35,000. HSBC has said it intends to resume dividend payments, although not at the same level as in the past due to its investment plans and the continuing cost of the Covid-19 pandemic. Analysts at Jefferies said the strategy seemed a bit “dull” and pointed to the lack of something “concrete” in terms of the future of its retail businesses in France and the US. Shares in HSBC rose to 6% in Hong Kong at the back of the pre-profit announcement, Solid PerformanceQuinn said in a statement that the bank had a “good financial performance in the context of the pandemic – especially in Asia “. Which lays a solid foundation for our future growth.” The bank on Tuesday outlined plans to invest about $ 6 billion in Asia, including $ 3.5 billion for its wealth business, which is expected to exceed $ 5 billion. “New wealth planners will hire in the next three years. Five years. The investment will come at the expense of HSBC’s global banking and markets division, which houses its investment banking operations,” Quinn said in a telephone interview with Bloomberg. ” Many of our global banking and market operations in the US and Europe have been low-yield, so you can assume that capital comes mainly from the global banking and markets. Continental Europe and the USA, in order to finance the investment in capital that we do, in prosperity and commercial banking, mainly in Asia but also in the Middle East. The bank hopes that commercial banking and markets will see double-digit growth in profits. This singled out the markets in Southeast Asia such as Singapore, as well as China and Hong Kong. China’s repression of Hong Kong has increasingly forced HSBC to accept criticism from the US and the UK as a cost to doing business in the region. Quinn was summoned this month to testify to British lawmakers over the moneylender’s decision to close the accounts of a banned democratic activist in Hong Kong. The expected credit losses reached $ 8.8 billion last year, as expected at the bottom of a previously announced $ 8 billion range of $ 13 billion. The bank now expects it to be significantly lower this year. The bank aims to reduce its cost base to $ 31 billion or less by 2022, as well as a $ 100 billion reduction in gross risk-weighted assets. The company does not expect to yield an average return target of between 10% and 12% in 2022, but will now target a return of 10% or higher in the medium term. a more ambitious $ 5-5.5 billion cost-saving target, combined with robust 4Q results, are signs that the moneylender has taken the turn and paved the way for a number of significant analysts’ upgrades, even to its equities. 50% has risen from 2020 lows. Jonathan Tyce, BI financial analyst. The bank has released little news on its plans for Europe and the USHSBC has said it is in talks to sell its French retail bank and is likely to make a loss on any sale. He is exploring strategic options for his US retail franchise and wants to focus on high-value customers. HSBC has become one of the largest U.S. businesses of any non-US bank, in part because of the ominous acquisition of Household International in 2003, the subprime lender that ultimately cost the company billions of dollars in write-offs. strategy and commentary on telephone interview with CEO) For more articles like this, please visit us at Bloomberg.com. Sign up now to stay ahead of the most trusted business resource. © 2021 Bloomberg LP