Hong Kong: HSBC pledged Tuesday to accelerate its hub in Asia despite escalating tensions between China and the West after it reported a 30% drop in profits for 2020 due to the coronavirus pandemic.
Reported profits after tax came to $ 6.1 billion, which the bank blamed mainly on better-than-expected credit losses and other bad debts.
The results came when HSBC published a new strategy laying out plans to double its bid to capture more of the Asian market – the region of the world where Europe’s largest lender earns the vast majority of its profits.
The strategy will see the London-based bank pour in about $ 6 billion to support operations across Asia, with a special focus on targeting wealth management in the increasingly affluent region.
The bank specifically referred to markets in Southeast Asia such as Singapore, as well as China and Hong Kong, as well as the Middle East.
“We plan to focus and invest in areas where we are stronger,” CEO Noel Quinn said in a statement.
The global economic slowdown caused by the virus has hit the financial giants hard, but HSBC faces another problem – its politically unstable position as a major business channel between China and the West.
HSBC is making 90% of its profits in Asia, with China and Hong Kong the main drivers of growth.
As a result, it found itself more vulnerable than most to the increasingly tense relationship between China and Western powers – especially after Beijing imposed draconian security law on Hong Kong last year and cracked down on supporters of democracy.
HSBC publicly ratified the Security Act, a move that has drawn criticism from lawmakers in Britain and the United States.
Bank accounts of some democracy activists in Hong Kong were frozen with Quinn being called to testify before British lawmakers earlier this month.
Meanwhile, HSBC found itself being called upon by Chinese state media to provide information that helped arrest a senior Huawei executive in Canada.
HSBC says it has to comply with the laws in every jurisdiction in which it operates.
But the twin crises summed up precisely the exact position in which a bank that relied so heavily on China now found itself.
“The geopolitical environment remains challenging – particularly for a global bank like HSBC – and we still recognize the potential impact it could have on our strategy,” Chairman Malcolm Tucker said in a statement accompanying the findings on Tuesday.
Despite these complexities, HSBC appears ready to operate in Hong Kong.
According to Bloomberg and the Financial Times, the bank plans to move three of its top executives from London to Hong Kong in the coming months.
Collectively, the trio will head wealth, personal banking, global banking and global markets and commercial banking services.
The move means companies responsible for about 95% of net revenue will soon run out of Hong Kong, Bloomberg said.
Other major banks have begun moving some of their top executives away from Hong Kong to rival cities such as Singapore and Tokyo.
The latest strategy comes just 12 months after HSBC announced a worldwide overhaul to cut 35,000 jobs by 2022, mainly in its less profitable European and American divisions.
Job cuts account for about 15% of the bank’s global workforce.
HSBC spent a year in vain seeking to sell its French retail arm, and the Financial Times reported on Tuesday that it is also planning to end its retail banking business in the US.
The bank said on Tuesday that its pre-tax adjusted profit halved in the fourth quarter to $ 2.2 billion, although that was better than the expected $ 1.8 billion thanks to the lender keeping costs low as part of a major restructuring it has already begun. running.
It also said it would start paying a dividend of $ 0.15, after British officials lifted the payments ban last year to keep balance sheets at the height of the pandemic panic.