HSBC is revamping its growth strategy by ramping investments in Asian countries after a drop in earnings for the 2020 financial year.
The UK headquartered bank has announced it will investing billions in Asian economies as it aims to attract wealthy clients in the booming Asian economies.
The company in an announcement following its 2020 financial report said it will divert its investments in the US and Europe into Asian countries by allocating $6 billion over the next five years in the region.
The bank’s planned Asian investments include $3.5 billion earmarked for its wealth business, which is expected to hire more than 5,000 new wealth planners over the next three to five years.
“Our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us. We achieved this while delivering a solid financial performance in the context of the pandemic – particularly in Asia – and laying firm foundations for our future growth.” Noel Quinn, HSBC Group Chief Executive said in a statement.
“Our strategy includes accelerating the shift of capital to areas, principally Asia and wealth, that have demonstrated the highest returns and where we have a sustainable advantage through scale. Our international network remains a key competitive advantage and we will continue to support cross-border banking flows between major trade corridors,” the bank said.
HSBC said it forecasts Asia’s share of group capital to rise from about 42% to more than half the total within the next years. The company also plans to relocate several of the company’s top executives from London to Hong Kong.
The bank aims in the next few years to target wealth management and commercial banking clients in Asian countries like Hong Kong, China, and Singapore to drive “double-digit growth.”
HSBC has already been receiving the bulk of its revenues from the Asian region.
The bank’s strategy update came as HSBC reported a 34% drop in profits for 2020 due to the Covid-19 pandemic.
Europe’s biggest bank also said it would resume paying a dividend of $0.15 a share in cash, the first payout announced by HSBC since October 2019.
The bank’s pre-tax profit also fell to $8.8 billion last year, down from $13.35 billion in 2019.
To mitigate losses the company plans cost-cutting measures by further reducing its workforce by 35,000 this year after already reducing 11,000 employees in 2020 as it reduces office footprint by 40% in the next few years.
After the announcement, HSBC shares were down 2% at noon trading in London. Shares in HSBC had risen as much as 6% in Hong Kong on the back of the announcement before paring gains.
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