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Tuesday, April 27, 2021, 12:47
HSBC continues its pivot to Asia
By Luo Weiteng
Tuesday, April 27, 2021, 12:47 By Luo Weiteng

People wearing protective masks walk past a HSBC Holdings Plc logo at the bank's headquarters building in Hong Kong, on Oct 22, 2020. (CHAN LONGHEI / BLOOMBERG)

HONG KONG - HSBC said its decision to relocate four senior executives to Hong Kong from London will take the bank a step closer to the land of opportunity.  

Dismissing the idea that the relocation will lead to added bureaucracy and blurred reporting lines, Noel Quinn, who was named HSBC’s permanent CEO in March 2020, said the relocation is a sign of the London-headquartered lender’s determination to lean more heavily into Hong Kong and Asian markets. 

HSBC, which makes most of its revenue in Asia, on Tuesday said its adjusted profit before tax for the first quarter of 2021 more than doubled to US$6.4 billion from a year ago. That beat analysts’ expectations of US$4.3 billion, according to estimates compiled by the bank.

Reported revenue was 5 percent lower at nearly US$13 billion, compared with a year ago. The lender said it resulted from lower interest rates in all global businesses last year. 

“Global Banking and Markets had a good quarter, and we saw solid business growth in strategic areas, including Asia wealth and trade finance, and mortgages in Hong Kong and the UK,” Quinn said in a statement.

Global banking and markets had a good quarter, and we saw solid business growth in strategic areas, including Asia wealth and trade finance, and mortgages in Hong Kong and the UK.

 Noel Quinn, HSBC CEO

Easing credit losses helped it turn around its UK business and it also posted a profit in the US even as it embarks on shifting billions of dollars to Asia. Weighed down by low interest rates, HSBC is seeking out more fee-based income, targeting to become a leader in wealth management in an increasingly affluent Asia.

Last week, HSBC, the biggest of Hong Kong’s three currency-issuing banks, announced it will invest US$3.5 billion to boost growth in the Asian wealth management business and make 5,000 wealth-related hires in the next five years. 

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The lender’s wealth business is an important pillar of its growth strategy in Asia, said Maggie Ng, head of wealth and personal banking, HSBC Hong Kong.

Quinn told a webinar on Tuesday that the bank’s wealth-related workforce in Asia grew by 600 in the first quarter, with 100 of those based on the Chinese mainland. By the end of the year, the bank hopes to post double-digit growth in its Asian wealth management business. 

HSBC’s Hong Kong-listed shares rose 2 percent to close at HK$46.00. The benchmark Hang Seng Index remained flat at 28,941.54 points.

Credit reversal

Asia continued to be its biggest profit center, but earnings there were relatively unchanged from a year earlier. It saw big jumps in profit at all of its major divisions.

The bank has unveiled one of the most radical responses to the pandemic that emerged early last year, with plans to cut its workforce by about 35,000 to drive down costs. Even so, expenses rose in the period, driven higher by restructuring charges and performance-related pay. 

But with the virus starting to be contained in major markets, HSBC was helped by a US$400 million reversal in credit losses. In 2021, such losses are now seen below the medium-term range of 30 basis points to 40 basis points of average loans it indicated at its latest annual results, the lender said.

Dual hubs

The bank said that it’s continuing negotiations on a potential sale of its retail operations in France. In the US, it’s exploring “both organic and inorganic options for our retail banking franchise,” according to the bank.

As part of its pivot to Asia, HSBC confirmed this month that three of its top executives would relocate to the HKSAR, meaning that most of the bank will be run from the region on a day-to-day basis.

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"We will increasingly run the bank as a dual-hub model across Hong Kong and London,” Chief Financial Officer Ewen Stevenson said in a Bloomberg Television interview.” “Shifting more capability to Asia is a clear strategic priority.”

HSBC has also spent the past year adapting its working practices as a result of the pandemic. Quinn said this month that he would turn the entire executive floor of the London HQ into meeting rooms, and the bank eventually aims to cut its office space by about 40 percent.

It revealed on Tuesday that it aims to cut its global office footprint by about 20 percent already this year.

With Bloomberg inputs

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