World HSBC to ramps up Asia pivot as pandemic hammers profits

07:35  23 february  2021
07:35  23 february  2021 Source:   afp.com

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HSBC Holdings Plc’s earnings beat estimates in the fourth quarter as the lender kept costs in check and signaled bigger investments to drive its pivot to faster-growing Asian markets. HSBC is pushing through one of the banking industry’s most radical responses to the pandemic in a strategic reset that comes as Chairman Mark Tucker said last month that “the world had changed.” Europe’s largest bank is shifting billions of dollars to beef up operations across Asia , seeking to become a market leader in wealth management by targeting a rapidly expanding affluent population in the region.

As the coronavirus damage ebbs in Hong Kong and mainland China, the bank ’s pivot to Asia may yet be vindicated. At least no one can blame HSBC Holdings Plc for the coronavirus. After a series of self-inflicted blows, from its muddled search for a new chief executive to a poorly received revamp, the bank joins the rest of the industry in being blindsided by the pandemic . The London-based lender, which counts Hong Kong as its single largest market, took its biggest charge for bad debt in almost nine years and posted a 51% slump in first-quarter adjusted profit .

HSBC on Tuesday vowed to accelerate its Asia pivot despite spiralling tensions between China and the West after it reported a 30 percent plunge in profits for 2020 caused by the coronavirus pandemic.

a woman standing in front of a crowd: HSBC plans to put a new focus on Asia as part of a strategic overhaul © ISAAC LAWRENCE HSBC plans to put a new focus on Asia as part of a strategic overhaul

Reported profit after tax came in at $6.1 billion, which the bank blamed primarily on higher-than-expected credit losses and other bad debts.

Fourth-quarter profits were halved to $2.2 billion but beat estimates, helped by the lender keeping costs down as part of a major restructuring it has already embarked on.

The results came as HSBC published a new strategy laying out plans to speed up its attempt to seize more of the Asian market -- the region of the world where the Europe's largest lender makes most of its profits.

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HSBC is accelerating its “ pivot to Asia ”, moving top executives from London to Hong Kong , scrapping its US retail banking operation and planning further expansion in Singapore. The moves, some of which are expected to be raised during a strategic update this week, come as tensions rise between the west and China that have left the Hong Kong -founded, UK-headquartered bank in a precarious position. Executives relocating to Hong Kong are likely to include Greg Guyett, co-head of global banking and markets, Nuno Matos, chief executive of wealth and personal banking , and Barry O’Byrne, chief

HSBC swung to a third-quarter net profit , as revenue in Asia rose from increased customer borrowing and a growing deposit base. The securities venture, which is the first majority-owned by a foreign bank , got the go-ahead from authorities in June. HSBC Chief Executive Stuart Gulliver said the bank ’s international network continued to deliver strong growth in the third quarter, and its pivot to Asia was driving higher returns and lending growth, particularly in Hong Kong .

The strategy will see the London-headquartered bank plough some $6 billion into shoring up operations across Asia, with a particular focus on targeting wealth management in the increasingly affluent region.

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The bank made specific mention of markets in Southeast Asia such as Singapore, as well as China and Hong Kong.

"We plan to focus on and invest in the areas in which we are strongest," CEO Noel Quinn said in a statement.

The global economic slowdown caused by the virus has hit financial giants hard.

But HSBC has a further headache -- soaring geopolitical tensions via its status as a major business conduit between China and the West.

HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.

As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly frayed relationship between China and western powers -- especially after Beijing imposed a draconian security law on Hong Kong last year.


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usr: 1
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