HSBC (HSBA) investor relations material

Strategic outlook and risk management

• Maintains strong focus on risk management, drawing on experience from past crises and emphasizing capital and liquidity strength to support customers during volatile periods.

• Confident in delivering a 17% ROTE for the year, with growth targets accelerating to 5% between 2027 and 2028 and a 50% dividend payout ratio.

• Closely monitors risks in the Middle East, with regional exposure contributing around 5% to PBT and 2% of loans and advances.

• Adjusts scenario weightings for ECL guidance based on conflict duration, referencing past approaches during the Russia-Ukraine crisis.

• No significant credit issues or drawdowns observed in the Middle East; deposit inflows have increased.

Growth drivers and business performance

• All four business segments are growing, each delivering mid-teens or better ROTE, supporting a culture of accountability and investment.

• Strategic focus on Asia, especially Hong Kong, with Hang Seng Bank restructuring expected to deliver $900 million in benefits for a $600 million cost.

• Growth in wealth management and fee income across Hong Kong, Singapore, Middle East, India, and China, leveraging strong deposit franchises and top-three FX and trade positions.

• U.K. growth outpaces GDP in targeted sectors like mortgages, infrastructure, and renewables, with pockets of growth in Hong Kong as commercial real estate stabilizes.

• Organic growth prioritized over acquisitions, with strict criteria for M&A; Hang Seng acquisition seen as a unique, accretive opportunity.

Operational efficiency and cost management

• Operational efficiencies and simplification savings of $700 million in 2024 help offset inflation, keeping net cost increases around 1%.

• Focus on shifting costs from run-the-bank to change-the-bank, enabling significant reinvestment in strategic initiatives.

• Technology harmonization and AI deployment drive productivity and cost synergies, with targeted use cases in KYC, credit lending, and transaction monitoring.

• No major staff reductions planned; emphasis on upskilling and doing more with the same workforce.