The bank – which is still headquartered in London, although it earns most of its money in Asia – told investors on Tuesday that it plans to “increase” its investments in the region by about $ 6 billion. More resources are also being redirected there, including relocating some key staff.
The plan includes downsizing in some other markets. HSBC is negotiating the sale of the retail banking business in France and is exploring options for the U.S. retail department that could include sales.
Pivot in Asia comes when HSBC’s pre-tax profit fell to $ 8.8 billion last year, down 34% from a year earlier. Revenue fell 10% to $ 50.4 billion.
Still, it was better than analysts had expected. And the bank said Tuesday it intends to return its dividend “as soon as possible,” starting at 15 cents a share.
Adapting to the Covid Economy
“This was a difficult decision and we deeply regret the impact it has had on our shareholders,” Tucker said in a statement, adding that the board has since “adopted a policy designed to deliver sustainable dividends in the future.”
HSBC shares rose 2.2% in Hong Kong on Tuesday, before withdrawing. Shares in London fell 1.1% at the start of trading.
“The top-down image isn’t great,” Russell said.
HSBC CEO Noel Quinn acknowledged that the bank was hit hard by record low interest rates. On Tuesday’s earnings call, he estimated that HSBC had lost about $ 5.3 billion in potential net interest income.
“We don’t expect rates to recover any time soon,” he added.
“What does tomorrow’s HSBC look like? We’re actually taking three pivots: towards Asia, wealth and revenue,” Quinn said.
The bank hopes to project investor confidence. It was said on Tuesday that it will increase its goal of reducing costs by one billion dollars, taking its overall goal to 31 billion by 2022.
It is also sticking to a previous plan to abolish assets in the amount of 100 billion dollars by the end of next year, and it is already “more than halfway” to achieving that goal, according to Stevenson.
But there is a long way to go. HSBC “obviously has a lot of work to do in terms of restructuring to reduce its cost base, and that won’t happen fast,” said Russell of Macquarie Capital. “We’ll talk about that in the next few years.”
“We’re going to stop trying to be everyone to everyone,” Quinn said. “We want to do things that take advantage of what we have and do it great.”