HSBC Holdings plc (‘HSBC’) is today holding an update for investors and analysts. The theme of the update is “Return to Growth and Value Creation”.
John Flint, Group Chief Executive, commented:
“After a period of restructuring, it is now time for HSBC to get back into growth mode. The existing strategy is working and provides a strong platform for future profitable growth. In the next phase of our strategy we will accelerate growth in areas of strength, in particular in Asia and from our international network. We will leverage our size and strength to embrace new technologies, investing USD15-17bn primarily in growth and technology, subject to achieving positive adjusted jaws each financial year.”
HSBC is the leading international bank with access to the world’s largest and fastest growing markets. Our international network covers over 90% of global GDP, trade and capital flows.
HSBC targets a return on tangible equity (‘RoTE’) of greater than 11% by 2020, while investing USD15-17bn, subject to achieving positive adjusted jaws each financial year. HSBC intends to sustain dividends at current levels and undertake, as appropriate, share buybacks to neutralise any share issuance as a result of scrip dividends, subject to regulatory approval. This will be supported by the following eight strategic priorities:
- Accelerate growth from our Asian franchise: build on our strength in Hong Kong, and invest in the Pearl River Delta (‘PRD’), the Association of Southeast Asian Nations (‘ASEAN’), and Wealth in Asia (including Insurance and Asset Management); we also aim to be the leading bank to support the biggest drivers of global investment: the China-led Belt and Road Initiative and the transition to a low carbon economy;
- Complete the establishment of the UK ring-fenced bank, increase mortgage market share, grow our commercial customer base, and improve customer service;
- Gain market share and deliver growth from our international network;
- Turn around our US business;
- Improve capital efficiency; redeploy capital into higher-return businesses;
- Create the capacity for increasing investments in growth and technology through efficiency gains;
- Enhance customer centricity and customer service through investments in technology: invest in digital capabilities to deliver improved customer service; expand the reach of HSBC, including partnerships; safeguard our customers and deliver industry-leading financial crime standards; and
- Simplify the organisation and invest in future skills.
Throughout the period from 2018 to 2020, our plan assumes our CET1 ratio will be above 14%. Our CET1 ratio has been above this level for the last five quarters.
The presentation materials also include the following targeted financial outcomes in respect of the period from 2018 to 2020:
Targeted financial outcomes
A RoTE greater than 11% by 2020
Positive adjusted jaws each financial year
Sustain dividends at current levels and undertake, as appropriate, share buybacks to neutralise any share issuance as a result of scrip dividends
To achieve these financial targets in the period from 2018 to 2020, we aim to deliver mid-single digit growth in revenue, low to mid-single digit growth in operating expenses, and c.1-2% annual growth in RWAs. We expect this to result in an improvement in reported revenues as a % of reported average RWAs from c.5.9% in 2017 to c.7% by 2020.
Details of the live webcast of the event, which commences at 17.00 Hong Kong time (‘HKT’), 10.00 British Summer Time (‘BST’), will be available at www.hsbc.com, together with the associated presentation material.
Investor enquiries to:
UK – Richard O’Connor
Tel: +44 (0)20 7991 6590
Hong Kong – Hugh Pye
Tel: +852 2822 4908
Media enquiries to:
UK – Morgan Bone
Tel: +44 (0)20 7991 1898
Hong Kong – Patrick Humphris
Tel: + 852 2822 2052
Note to editors:
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 3,900 offices in 67 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,652bn at 31 March 2018, HSBC is one of the world’s largest banking and financial services organisations.