- HSBC
- HSBC
Key Points
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HSBC is prioritizing growth in Hong Kong, wealth management, trade finance and the U.K. Hong Kong remains highly profitable, while wealth management generated $22 billion in net new money during the second quarter.
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The bank’s 15 planned business exits will create revenue headwinds of roughly $2 billion, but release about $1.1 billion in costs for reinvestment in core businesses. HSBC also raised its Simplification Saves target to $2 billion from $1.5 billion.
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HSBC plans to maintain a 50% dividend payout ratio, fund organic growth and use excess capital for share buybacks. CFO Pam Kaur is departing after 13 years, with an orderly handover underway.
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HSBC (NYSE:HSBC) Group Chief Financial Officer Pam Kaur said the bank remains focused on investing in growth while maintaining cost discipline, with Hong Kong, wealth management, trade finance and the U.K. among its priority areas.
Speaking at the Barclays Global Financial Services Conference, Kaur said HSBC’s four businesses were growing and generating returns above the minimum targets the bank set in February. She said the company’s targets are “the minimum to which we manage the bank,” rather than a cap on performance.
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Kaur also discussed her planned departure after 13 years at HSBC, including two years as CFO. She said she had completed 40 years in the financial-services industry and believed this was an appropriate time to pursue other leadership opportunities. Kaur said her immediate priorities are ensuring an orderly handover and continuing to advise Group Chief Executive Georges Elhedery on strategic priorities after her CFO tenure.
Hong Kong and Wealth Remain Key Growth Areas
Kaur described HSBC’s Hong Kong operation as a major roughly 45% return on tangible equity in the second quarter using risk-weighted asset allocations, she said a leverage-exposure-based approach would still produce a return “well into 30% plus.”
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She said HSBC continues to see sustained new-customer activity in Hong Kong. The number of new-to-bank customers in July and August remained at the average level recorded during the first half, which Kaur called an encouraging sign for both the market environment and HSBC’s ability to retain share.
