HSBC To Focus On Growth And Expansion For Higher Profits
Zacks Investment Research | Jun 11, 2018 09:05PM ET
With a view to boost profitability, HSBC Holding plc’s (NYSE:HSBC) CEO John Flint has announced plans to invest about $15-$17 billion in technology and expansion of operations by 2020.
Flint expects the second phase of bank’s turnaround to be aggressive on growth in order to deliver profits in the years ahead. He acknowledged that the past strategies have created a strong base for future growth.
The CEO also disclosed some financial goals that the company aims to achieve by the end of 2020. Return on tangible equity (RoTE) of more than 11% is targeted along with assumption of CET1 ratio above 14% level. The company will keep dividends at the current level but might undertake share buyback programs in the near term.
These financial targets are expected to be achieved between 2018 and 2020, with support from mid-single digit growth in revenues, low to mid-single digit rise in operating expenses and 1-2% annual increase in risk-weighted assets.
Eight Strategic Pillars
HSBC has laid down eight strategic priorities to drive its financials. It targets to improve performance with special focus on building operations in Asia including Hong Kong in order to deliver high-single digit revenue growth every year from the region.
In the U.K., HSBC aims at increasing mortgage market share along with growing commercial clients base. It also seeks to improve clients’ satisfaction by serving them better.
The company also wants to build upon its market share in transaction banking and deliver mid-to-high single digit revenue growth per annum from its international network. Moreover, it aims to improve the efficiency of its U.S. operations by targeting a RoTE of more than 6%.
In a strategy update published Monday, Flint noted that, "After a period of restructuring, it is now time for HSBC to get back into growth mode.” The company plans to be more capital efficient and use the excess capital by investing in technology. Through this investment, HSBC targets to get a strong hold on digitization and further expand reach.
While these initiatives might lend some respite to the bank, struggle with revenue slump owing to low interest rates and stringent regulatory requirements is likely to continue. Also, the company’s legacy business misconduct matters have resulted in several litigations and probes.
In three months’ time, the stock has gained 1.6% on the NYSE against 8.6% decline recorded by the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.