HSBC to spend bil­lions in tech and turn round its US di­vi­sion in bid to get ‘back into growth mode’

Belfast Telegraph - Business Telegraph - - News - BY KALYEENA MAKORTOFF

HSBC will “sim­plify” the busi­ness, in­vest bil­lions in tech and turn around its US di­vi­sion as part of new chief ex­ec­u­tive John Flint’s growth plans.

The bank yes­ter­day re­leased a strat­egy up­date meant to get it “back into growth mode”, set­ting fresh fi­nan­cial tar­gets that in­clude keep­ing div­i­dends at cur­rent lev­els and launch­ing share buy­backs.

Mr Flint, who was ap­pointed ear­lier this year, said: “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.”

In an eight-point plan, the lender will look to boost growth across its Asia busi­ness, com­plete ring-fenc­ing of its UK bank, boost its share of the mort­gage mar­ket and im­prove cus­tomer ser­vice.

It is also aiming to com­plete the turn­around of its US busi­ness and gain mar­ket share across its in­ter­na­tional net­work.

The chief ex­ec­u­tive said the bank’s plans to “sim­plify the or- gan­i­sa­tion” did not re­quire a cut in head­count, but stopped short of rul­ing out job cuts com­pletely.

“The re­al­ity is tech­nol­ogy is trans­form­ing our in­dus­try in quite un­usual and rapid ways. We have to be alert to that,” he told jour­nal­ists on a me­dia call.

“We did sig­nal in the script that we will bench­mark our cost ef­fi­ciency against our peers and where we are in­ef­fi­cient we will have to work out so­lu­tions to get us back in line. So no plans at this stage for any­thing with re­spect to re­dun­dan­cies or re­trench­ment or any­thing like that.

“But HSBC will con­tinue to evolve through this pe­riod be­cause we will have to re­spond to the way in which cus­tomers are chang­ing the way they in­ter­act with the bank, largely through tech­nol­ogy.”

He also ruled out fur­ther UK bank clo­sures, say­ing HSBC’S net­work was al­ready re­duced in re­cent years to the “op­ti­mal size”.

Mr Flint — who took the chief ex­ec­u­tive role on Fe­bru­ary — said HSBC will also in­vest 15-17 bil­lion US dol­lars (£11.2bn-£12.7bn) “pri- mar­ily in growth and tech­nol­ogy”.

Those plans are meant to help HSBC de­liver a re­turn on tan­gi­ble eq­uity (ROTE) — an in­dus­try mea­sure of net profit — of more than 11% by the end 2020.

In the mean­time, HSBC said it ex­pects to re­port mid-sin­gle digit growth in rev­enue be­tween 2018 and 2020 and is likely to see low to mid-sin­gle digit growth in op­er­at­ing ex­penses.

HSBC shares were down nearly 1% in morn­ing trad­ing.

HSBC is Europe’s big­gest bank, but earns most of its prof­its from Asia.

Last year, it com­pleted a cor­po­rate over­haul to raise prof­itabil­ity by fo­cus­ing more on high-growth Asian emerg­ing mar­kets while shed­ding busi­nesses and work­ers in other coun­tries.

Strat­egy up­date: HSBC bank

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