Here’s How HSBC is Getting Back in the Game
HSBC (NYSE:HBC) CEO Stuart Gulliver has delivered the report card on the bank’s performance one year into its three-year recovery plan, saying Thursday that HSBC was on track to achieve targets for profitability and cost savings.
At a presentation to analysts, Gulliver said, “Investors have been skeptical about our ability to get our hands around HSBC. The skepticism was about anybody’s ability to move such a large firm and change its direction. At the year one report card we can evidence that on things we can control we are demonstrating significant traction. We are delivering with good momentum given a difficult backdrop.”
Part of all this was achieved through a sale of 28 businesses that netted $5.9 billion, and moving out of $55 billion in risk-weighted assets. The bank saved $2 billion in costs, even after paying $1.2 billion extra in wage inflation in emerging markets and $400 million in additional regulatory costs.
By 2013, the bank expects to boost savings to $3.5 billion. In addition, a focus on 22 priority growth markets, which currently account for over 90 percent of group profit, is expected to boost profitability.
The bank will continue to sell assets that lose money or lack scale and its U.S. real estate portfolio will also likely be trimmed. A key move will be the integration of its four major businesses, namely, retail banking and wealth management, commercial banking, global banking and markets, and private banking, which alone could generate incremental revenue of $2 billion, double the target set.
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