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26 Sep 2013

Driving superior returns

John Flint

by John Flint

Chief Executive, Retail Banking and Wealth Management, HSBC

HSBC’s Retail Banking and Wealth Management (RBWM) business is making good progress against its strategic objectives, recording an encouraging performance in the first half of 2013. In a challenging macroeconomic environment, however, we must make further progress to deliver the full potential of the business.

RBWM’s purpose, like the rest of HSBC, is to connect our customers to opportunities and help them realise their ambitions. We set ourselves three strategic objectives in 2011:

  • To manage the portfolio actively to drive superior returns
  • To transform our retail business globally, to reduce complexity, improve our customer service and drive efficiency
  • To build a consistent needs-driven wealth management offering

We have already made significant progress, announcing 39 transactions to dispose of or exit businesses since the beginning of 2011. Today, we are focusing on 20 home and priority markets where we can deliver scale in our target segments and drive superior returns. These markets represent 60 per cent of the wealth in the world*.

Streamlining our portfolio and simplifying our product range means we are better able to concentrate on the quality and consistency of the service we provide. With a globally managed business, we are able to identify the best practices and products in different markets and implement them across our network.

Today, we are focusing on 20 home and priority markets where we can deliver scale and drive superior returns

RBWM delivered a positive performance in the first half of 2013. Within the core business, reported profits of USD3.5 billion were 1 per cent higher than the first half of 2012. On an underlying basis, eliminating the effects of currency translation differences, acquisitions and disposals, profits of USD3.5 billion were 50 per cent higher than the previous year as we benefited from higher revenues and lower costs.

In a challenging macroeconomic environment, further progress will be essential if we are to reach our 2016 targets. These are to achieve: a return on risk-weighted assets of 5.0 per cent to 5.5 per cent (3.8 per cent to 4.3 per cent including the US run-off portfolio); “positive jaws” – growing our income at a faster percentage rate than our costs; and a USD3 billion increase in wealth revenues over the period 2010-2016.

Improving technology, service and products will help us deliver the strategy and achieve these targets. We are rolling out our HSBC mobile banking application globally. It was live in 12 markets in the first half of 2013 and is expected to be in 26 markets at the year end. We are progressively deploying contactless mobile payments and mobile features for tablet devices.

A consistent incentive plan now rewards our wealth teams for how well they meet the needs of clients. We are equipping front-line staff with tablet-based tools to help them offer a better and more efficient service, and we continue to improve the products we offer. We are making it easier for our customers to carry out foreign exchange transactions and trade stocks. We continue to expand the range of services available for renminbi (RMB), the Chinese currency, which is growing in importance.

As one of HSBC’s four Global Businesses, RBWM is a significant contributor to the Group, accounting for 23 per cent of reported profits before tax in the first half of 2013. Though we are making progress, we are still in the middle of a major transformation of our RBWM business, which we must complete so that we can realise the full benefits.

*According to the Credit Suisse Wealth Databook 2012

Download the full presentation.

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