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Original title: HSBC’s “Hao Investment” of US $ 6 billion continues to bet on Asia in the next five years
HSBC Chief Executive Noel Quinn said at a performance press conference on February 23 that after considering the interim policy of the UK Prudential Regulation Authority for distribution to shareholders in 2020, the board of the Bank announced a dividend payment for 2020. It is $ 0.15 in cash.
The bank said the board has adopted a policy aimed at sustainable dividends going forward. Starting in 2022, HSBC plans to gradually set the target pay rate between 40% and 55% of earnings per common share based on accounting.
The UK Prudential Regulation Authority (PRA) requested local banks such as HSBC and Standard Chartered on April 1 last year to immediately suspend the distribution and repurchase of dividends. This is the first time that HSBC has stopped paying dividends since its 1991 reorganization and the listing of the group as a whole, once prompting heated discussions in the market.
The financial report shows that at the end of last year, HSBC’s profit before tax was $ 8,777 million, a year-on-year decrease of 34.24%. Due to the increase in expected credit losses and other credit impairment provisions, also as revenues decreased, profit fell, but at the same time operating expenses decreased, offsetting the partial decrease.
Dragged down by falling global interest rates, the bank’s net interest margin fell further to 1.32% last year, down 26 basis points year-on-year. In the same period, expected credit losses were $ 8.8 billion, an increase of $ 6.1 billion year-on-year, primarily reflecting the impact of the novel coronavirus outbreak and the weakening of future economic prospects.
HSBC’s performance last year was better than market expectations. Investors “voted with their feet.” In intra-day trading on February 23, HSBC Holdings (00005.HK) once soared 6.5%, setting a new high of HK $ 49.5 per share at almost a year from that day to close. , the share price rose 0.4% to 46.7 Hong Kong dollars, with a turnover close to 5 billion Hong Kong dollars.
In June last year, HSBC announced the restart of the layoff plan, with the aim of cutting some 35,000 jobs in the medium term. By the end of 2022, the number of the group’s employees will drop from 235,000 at the end of last year. to about 200,000.
The financial report shows that at the end of last year, HSBC had approximately 226,000 full-time employees, a decrease of approximately 6,764 compared to the end of June last year and a decrease of approximately 9,000 compared to the end of 2019. At the end of the Last year, there were 29,000 employees in the Hong Kong market, a year-on-year decrease of 2,000. The number of employees in mainland China was 27,000, a year-on-year decrease of 1,000.
Invest US $ 6 billion in Asia in the next five years
As the center of gravity of the world economy continues to shift eastward and interest rates have long remained low, HSBC announced that it will increase investment in the Asian market.
Wang Dongsheng, Vice President and CEO of HSBC, said at the performance meeting that day, HSBC currently operates in 19 markets in Asia, covering 98% of Asia’s GDP, and has been entrenched in multiple markets for 140-150 years. and it has unique advantages. “Over the next five years, HSBC will invest US $ 6 billion in Asia, primarily for wealth and international wholesale banking. Our goal is to achieve double-digit growth in earnings before taxes.”
At the same time, he placed particular emphasis on the four markets of Hong Kong, mainland China, Singapore and India, calling them the main growth engines of the bank going forward. Its goal is to double the size of Assets Under Management (AUM) within 5 years., We plan to hire 3,000 wealth management managers and strengthen serving the cross-border banking needs of SMEs and retail clients in the Bay Area. Guangdong-Hong Kong-Macao “.
Indeed, as early as June 2015, HSBC announced a major strategic adjustment at an investor conference in London, changing the concept that had been admired before: “the world’s local bank”, but vowing to become “the world’s international bank. China”. shift its focus eastward to accelerate investment in Asia, especially China.
Among HSBC’s top five regional markets, Asia remains the group’s largest source of earnings. The financial report shows that last year the bank’s profit before tax in the Asian market was 12,832 million dollars, a year-on-year decrease of 30.52%, which contributed to almost all of the bank’s profits, far by ahead of other markets. During the same period, HSBC lost US $ 4.205 billion and US $ 37 million in the European and Latin American markets, respectively, while pre-tax earnings in the Middle East and North Africa market plummeted 99, 18% year-on-year to US $ 19 million. and North American earnings fell 78.1% to $ 168 million.
By business, HSBC’s personal banking and wealth management business adjusted earnings before taxes of $ 4.14 billion last year, a sharp drop of 53.4% year-on-year; the profit before taxes of the global banking and capital markets was US $ 4.83 billion, a year-on-year decrease of 6.6%; tax on industrial and commercial financing companies The previous profit was US $ 1,868 million, a fall of almost 74% year-on-year.
At the same time, HSBC’s top three business executives are reported to be relocating from London to Hong Kong. They are Greg Guyett, Co-Head of Global Banking and Capital Markets, Nuno Matos, Executive Director of Wealth Management and Personal Banking, and Barry O’Byrne, Executive Director of Global Commercial Bank. This means that department heads who contribute 95% of HSBC’s revenue in 2019 will be based in Hong Kong.
Furthermore, Qi Yaonian revealed at the performance meeting that the bank is evaluating the sale of the retail banking business in the French market and has entered the negotiation stage, “but has not yet made a final decision. If a sale agreement, considering the performance of the French market retail business, the sale is expected to register a certain loss. “
He said HSBC will also explore different options for retail businesses in the US market, focusing on wholesale business, wealth management and maintaining its leadership position in US dollar clearing, trading and currency exchange businesses.
Hong Kong’s contribution to earnings increased to 94%
As the center of gravity of the global economy continues to shift eastward, as an international bank established in Shanghai and Hong Kong, HSBC has considered whether to move its headquarters from London to Hong Kong in recent years. The UK introduced the bank tax after the financial tsunami and has raised tax rates at least eight times since 2010. The high bank tax has also caused many large London-based banks to worry about it.
According to a 21st Century Business Herald reporter, as early as 2015, HSBC Hong Kong shareholders had requested to relocate their headquarters to Hong Kong. Some minority shareholders made clear at the informal general meeting of shareholders held in Hong Kong in April 2015 that HSBC’s Asian business is currently making money, but shareholder interests have been diluted by its European and US businesses. Therefore, HSBC must move its headquarters to Hong Kong.
The HSBC Group was founded in Hong Kong in 1865 and its headquarters did not move to London until 1993. Today, most of the bank’s profits also come from the Greater China region. As HSBC’s home base, the Hong Kong market has always been the bank’s top priority in Asia, and its contribution to earnings has continued to grow. The pre-tax profit of the Hong Kong market during the same period was US $ 8.207 billion, a year-on-year decrease of 37.16%, which still contributed almost 94% of the bank’s profit last year.
According to the data disclosed in the financial report, at the end of December last year, the value of the accounts of HSBC customers in Asia reached 762.4 billion dollars, of which the value of customers in the market Hong Kong’s was $ 531.5 billion, representing an increase to 32%. In contrast, the bank is in the UK. The share of customer value in the North American market is 30% and 11% respectively.
Recently, HSBC has made frequent moves in the Chinese market. As early as February 1, the bank announced the establishment of the Guangdong-Hong Kong-Macao Greater Bay Area business department, appointing the current Director of Trade Finance of HSBC Hong Kong, Chen Qingyao, as general manager of the department. Greater Bay Area business center, and the headquarters of the Greater Bay Area commercial department in Guangdong.
HSBC stated that it will take the Bay Area as the focus of its Asian business development strategy. Chen Qingyao will officially take office in March this year and will report directly to the CEO of HSBC Hong Kong and the President and CEO of HSBC China.
HSBC merged its retail banking and wealth management, asset management, insurance and private banking businesses last year, and established a personal banking and wealth management division. As of the third quarter of 2020, HSBC managed equity balances of more than 1 , 5 trillion US dollars. And on February 18, he announced the appointment of three senior officials in the personal banking investment and wealth management departments in Asia.
(Author: Zhu Lina Editor: Chenqing Mei)
