HSBC targets Asia returns in ‘mid-teens’ amid Ping An pressure

HSBC Holdings said it is targeting return on tangible equity for its Asia business in the “mid-teens”, amid pressure from its top shareholder to improve returns.

Ping An Insurance Group has criticised the bank’s current model in Asia as being inefficient. It has taken specific aim at the lender’s returns for Asia, which it said stood at 10.5 per cent in 2022, compared with 13.8 per cent for its Asian peers on average. The Chinese firm is also pushing for a separate listing of HSBC’s Asian arm. 

HSBC reiterated on Monday (May 15) that the group’s ambition is for returns to minimally be at 12 per cent from 2023. It added that it is targeting high single-digit percentage growth in wealth revenue, and mid-single digit percentage lending growth over the medium to long term.

The lender also re-emphasised the importance of its international network.

“We now have an unrivalled international proposition, that supports our Asia customers looking to trade with and grow in markets across Europe, the Middle East and the Americas, and vice versa,” said chief executive officer Noel Quinn. 

About 60 per cent of HSBC’s wholesale client business in Asia is cross-border, it said. It has been pivoting to the continent, selling operations in other parts of the world. It reiterated its commitment to invest about US$6 billion in Asia between 2021 and 2025.

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HSBC, which counts Hong Kong as its biggest market, has also been diversifying its presence in other markets in the region, amid rising geopolitical tension. 

“In addition to our core strength in Hong Kong, we now have growth engines in mainland China, India, Singapore and beyond,” said Quinn. 

The bank said that Asia’s economic growth is diversifying. Banking revenue from China is projected to grow in excess of 9 per cent, while that from India is expected to rise in excess of 8 per cent.

Wealth is a key to its pivot to Asia, and the bank has been ramping up operations in the mainland. It also aims to launch private banking in India in July. 

The lender said it will be holding a week-long seminar for investors and analysts in Hong Kong and Singapore, to discuss its ambitions. Rival Standard Chartered is also holding meetings with investors this week. 

HSBC will also be holding its in-person China conference in Shenzhen on May 17 and 18.

A spokesperson said that speakers at the event will include chairman Mark Tucker; co-chief executive for Asia-Pacific David Liao; and global banking and markets chief executive Greg Guyett. BLOOMBERG