HSBC investing up to $22.7b as it pivots to growth strategy

HSBC chief executive John Flint said it was time for the bank to get back into growth mode after restructuring.
HSBC chief executive John Flint said it was time for the bank to get back into growth mode after restructuring.

LONDON • HSBC will invest US$15 billion to US$17 billion (S$20 billion to S$22.7 billion) in the next three years in areas including technology and its core Asian markets of Hong Kong and China as it swings from a strategy of cost-cutting to growth, new chief executive John Flint said yesterday.

The announcement is Mr Flint's first public indication to shareholders of the strategy he intends to pursue at HSBC, which has struggled to meet its profit goals in recent years after a shrinking of its global empire also cut income.

The update marks a definitive pivot in HSBC's post-2008 crisis strategy, from cost-cutting and restructuring to investment and expansion as it seeks to improve returns. The bank is targeting a return on tangible equity of 11 per cent by 2020, Mr Flint said, and will sustain its dividends at current levels.

"After a period of restructuring, it is now time for HSBC to get back into growth mode," he added.

The main points of the bank's refreshed strategy will likely come as little surprise for HSBC investors, with the focus squarely on further expansion in China and its prosperous southern Pearl River Delta region. The bank will also pursue further expansion in the British mortgage market as one of eight new strategic targets, HSBC said.

HSBC shares showed little reaction to the announcement, remaining flat on the London Stock Exchange early yesterday morning, compared with a 1 per cent rise in the FTSE 350 British banks index.

The bank has found no silver bullet for its underperforming US business, the strategy update released to investors yesterday showed.

Mr Flint in February said the bank was reviewing its US franchise, which has suffered from lack of scale and the consequences of its disastrous US$15 billion acquisition of consumer lender Household in 2003.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 12, 2018, with the headline 'HSBC investing up to $22.7b as it pivots to growth strategy'. Print Edition | Subscribe