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25 Jul 2013

Asia leads the way

Peter Wong

by Peter Wong

Deputy Chairman and Chief Executive, The Hongkong and Shanghai Banking Corporation Limited

Asia remains the strongest performing region for HSBC, despite suffering from the economic slowdown since the latter part of 2012. It remains strategically important to the Group and we continue to invest for the long term.

Hong Kong is one of our two home markets, accounting for nearly 37 per cent of Group profits in 2012. Eight of our 20 priority growth markets are also in Asia.

We continue to focus on supporting increased connectivity between China and the rest of the world, whether that is international firms entering China or Chinese companies keen to build overseas business. We are positioned in all of the big city clusters in China, which contain 30 per cent of the population, but 70 per cent of the GDP growth opportunity.

Asia is a major growth market and our key strategic priority is to help connect China
to the world

We remain the biggest international bank in China, measured by size of network and profit before tax, and intend to maintain this. We are also the leading bank internationally for renminbi (RMB), China’s currency.

As more international companies and investors realise the advantages of using RMB when dealing with China, HSBC is ideally placed to benefit. We are focusing on core RMB products such as advances, deposits, bonds, trade and foreign exchange. We are supporting this with our extensive international network, offering clients RMB capabilities in more than 50 markets. Our strengths were recognised at the 2012 Asia Risk Awards, where we were named “RMB House of the Year”.

We are also investing to build scale in other priority markets, namely India, Singapore, Malaysia, Indonesia, Australia and Vietnam. In non-priority markets we are focusing resources on maintaining our leading position in helping facilitate trade, capital and wealth flows and have reshaped our operations.

Since May 2011 we have made a number of disposals of non-core businesses in Asia including the sale of Japan private banking operations and Retail Banking and Wealth Management operations in Thailand. Disposals during the year provided more than USD4 billion in net gains and in 2013 we also completed the sale of our stake in Chinese insurance company Ping An.

By improving organisational efficiency we made annual savings in 2012 of USD390 million in Asia. Our Asian operations are now simpler, easier to manage and better prepared to take advantage of growth opportunities.

Our profits show the resilience of our Asian performance, despite the economic headwinds. Hong Kong and the Rest of Asia Pacific (RoAP) reported improved pre-tax profits in 2012 of USD7.6 billion and USD10.4 billion respectively. This represents a combined contribution of USD18 billion to overall Group profit of USD20.6 billion.

Not only did Asia account for a large share of Group profits but pre-tax profits in Hong Kong increased 30 per cent on 2011 and in the RoAP by 40 per cent.

In Asia, Commercial Banking (CMB) reported profit before tax up 24 per cent for the year at USD4.8 billion, and was named number one global trade finance bank in the world, according to the Oliver Wyman Global Transaction Banking Survey 2012. Global Banking and Markets (GBM) showed pre-tax profits up 10 per cent to USD4.8 billion. Revenues from CMB and GBM collaboration increased in 2012, most notably through FX products to corporate customers. Looking forward, our intention is to further enhance collaboration between these two businesses to better serve our international clients. Retail Banking and Wealth Management reported pre-tax profits of USD5.2 billion – a 12 per cent increase on the previous year.

HSBC is one of the best capitalised banks in the world. Asia has been at the heart of the bank since we opened for business in Hong Kong and Shanghai in 1865. We are gaining market share in key sectors and are well positioned in geographies around the world that will deliver growth over the next 20 years.

Download the full presentation, published on 1 June 2013 .