HSBC sets out high-tech growth plan for China

HSBC will invest $15 billion (Dh55. 1bn) to $17bn in the next three years in areas including technology and China as it swings from a strategy of cost-cutting to growth, while keeping profitability and dividend targets little changed, new chief executive John Flint said yesterday.

In a first public outline of his strategy at the helm of Europe’s biggest bank by market capitalisation, Mr Flint set out ambitions to grow its return on tangible equity to 11 per cent, in line with previous targets, from 6.8 per cent in 2017.

The update marks a shift in HSBC’s post-2008 crisis attitude from cost-cutting and restructuring to investment and growth, but analysts said the focus on China and technology were familiar themes.

“The early read is that this is not a revolutionary strategy review – rather accelerating growth (particularly in Asia) as well as driving better value creation,” analyst Joseph Dickerson at Jefferies International in London said.

The main points of the bank’s refreshed strategy will come as little surprise to HSBC investors, with the focus squarely on further expansion in China and its prosperous southern Pearl River Delta region in particular.

The bank also wants to expand in the British mortgage market, it said.

“After a period of restructuring, it is now time for HSBC to get back into growth mode,” Mr Flint said.

The bank has found no silver bullet for its underperforming US business, the strategy update showed, with HSBC set to focus on trying to grow its market share among internationally focused mid-sized companies.

The bank will also resume unsecured lending in its retail bank, taking on the riskier but more profitable segment of the consumer market that drives the higher profits achieved by its domestic rivals in the United States.