HSBC riding on strong macro environment, expects to gain market share in next 3 years

Singapore

HAVING invested heavily in growing its South-east Asian franchise, HSBC Singapore is seeing strong growth across the entire spectrum of its businesses and expects to gain market share in the next three years.

CEO Tony Cripps told The Business Times that the bank has been riding the "strong macro environment" during the past few years.

"We have been growing across all domestic and international businesses out of Singapore. Last year we enjoyed our strongest growth in six years," he said. "We are still on a strong build mode right now, having completed the first year of our three-year strategic plan."

This strategic plan envisages 5 per cent compounded annual growth, a rate which will see the bank grow its market share in a broader market where growth averages 4 per cent.

On a global level, the London-headquartered bank last month reported full-year pre-tax earnings of US$19.89 billion for 2018, up 16 per cent.

Singapore posted pre-tax profit of US$491 million, 6 per cent higher than the US$463 million in 2017.

Mr Cripps noted that while the fourth quarter of last year had been a challenging period for the bank worldwide, the first quarter of this year is looking promising.

Meanwhile, HSBC's 140-year-old Singapore-based franchise has articulated eight priorities: capturing infrastructure; capturing sustainable finance opportunity; scaling up SME business; growing Singapore as an Asean hub; investing in digital capabilities; turning around and growing the domestic retail business; scaling up Singapore as offshore wealth hub; and capturing international flows.

It expects to grow the business from an Asean customer base comprising 10,000 corporate clients, 4,500 subsidiaries of multinationals, more than 20,000 SME clients and 2.5 million retail customers. In the last 10 months, it launched initiatives such as branch revamps, a new HSBC Jade brand for its high net worth segment, upgrade projects across all business lines, and plans to boost headcount by 10 per cent (it has 3,000 employees in Singapore). All these were done in proportion to the size of the respective markets.

According to Mr Cripps, one of HSBC Singapore's fastest-growing segments is its private banking franchise.

"We are already one of the biggest private banks in Asia. Singapore is a huge base for international wealth, with 10 per cent growth year on year. In about 15 years, we see Singapore overtaking Switzerland as the largest private banking centre in the world. We are positioning ourselves for that."

While not revealing precise numbers, he said that HSBC Singapore had doubled net new money in 2018, from 2017, with half of net new funds coming from cross-business referrals. And this growth has spurred demand for staff.

Last year, the private banking franchise added about 70 new staff, and is on the lookout for more this year. The private and retail banking units together plan to double overall combined total wealth over five years and add over 400 customer-facing employees in the next few years.

"We are seeking talent from across the world," Mr Cripps said.

Technology is another major focus.

HSBC is investing US$100 million to improve digital infrastructure at its two hubs of Singapore and Hong Kong - part of the global bank's plans to invest up to US$17 billion in technology globally by 2020.

But Mr Cripps cautioned that the application of technology should be at a measured pace.

"Technological innovation and tech-spend in banking is not new. I was very much involved in this during the 1990s when I was based in London. That said, we are seeing massive growth now in fintech."

He does not see technology entirely replacing the human touch in banking.

"You do need the cool stuff, and you must adopt technology where you can improve efficiency and services. But people are important. Automation and technology should take care of the boring stuff, leaving people to add value and provide better customer experience."

He reckons that over-reliance on technology can raise reputational and security risks.

"Also, your people must feel safe and confident. You must create resilience (for employees) via training and upskilling."

Several years ago, the bank restructured staff incentives to focus on "softer" targets such as customer engagement and quality of service.

"About five or six years ago, we decided that fee-for-target is a conflict of interest," he explained. "We now place more emphasis on providing holistic service. The model has been very effective, and our people are generally happier."

But one thing does not change - the focus on growth.

"In five years, we are going to see a much bigger HSBC franchise headquartered in Singapore and servicing the Asean region and beyond. Our head of private banking for the region is based here. Our head of global banking is based here. Our head of infrastructure is based here. We are investing big time in our Singapore hub."