One of the leading banks in the world, HSBC, has said they plan to invest $15-17 billion over the course of next three months in areas including technology and its core Asian markets of Hong Kong and China.
According to the new Chief Executive of HSBC John Flint, the bank is taking a turn from a strategy of cost-cutting to growth. The announcement was made during Flint’s first public indication to shareholders of the strategy he intends to pursue at HSBC, which has struggled to meet its profit goals in recent years after a shrinking of its global empire also cut income.
The new strategy is definitely a pivot in HSBC’s post-2008 crisis strategy, from cost-cutting and restructuring to investment and expansion as it seeks to improve returns. The bank is targeting a return on tangible equity of 11 percent by 2020, Flint said, and will sustain its dividends at current levels.
The main points of the bank’s refreshed strategy will likely come as little surprise for HSBC investors, with the focus squarely on further expansion in China and its prosperous southern Pearl River Delta region in particular.
The bank will also pursue further expansion in the British mortgage market as one of eight new strategic targets, HSBC said.
HSBC shares showed little reaction to the announcement, remaining flat at 0852 GMT compared with as 1 percent rise in the FTSE 350 British banks index.
The bank has found no silver bullet for its underperforming U.S. business, the strategy update released to investors on Monday showed, with HSBC set to focus on trying to grow its market share among internationally-focused mid-sized companies.
Flint in February said the bank was reviewing its U.S. franchise, which has suffered from lack of scale and the consequences of its disastrous $15 billion acquisition of consumer lender Household in 2003.