12th June 2018

HSBC announces ‘Return to Growth and Value Creation’ strategy

HSBC Holdings plc (HSBC) gas announced an update of its strategy. The theme of the update is ‘Return to Growth and Value Creation’. HSBC targets a return on tangible equity (RoTE) of greater than 11 per cent by 2020, while investing US£15-17bn, subject to achieving positive adjusted jaws each financial year. HSBC intends to sustain dividends at current levels and undertake, as appropriate, share buybacks to neutralise any share issuance as a result of scrip dividends, subject to regulatory approval.

This will be supported by the following eight strategic priorities:
1. Accelerate growth from our Asian franchise: build on its strength in Hong Kong, and invest in the Pearl River Delta, the Association of Southeast Asian Nations, and Wealth in Asia (including Insurance and Asset Management); it also aims to be the leading bank to support the China-led Belt and Road Initiative and the transition to a low carbon economy.
2. Complete the establishment of the UK ring-fenced bank, increase mortgage market share, grow our commercial customer base, and improve customer service.
3. Gain market share and deliver growth from its international network.
4. Turn around its US business.
5. Improve capital efficiency; redeploy capital into higher-return businesses.
6. Create the capacity for increasing investments in growth and technology through efficiency gains.
7. Enhance customer centricity and customer service through investments in technology: invest in digital capabilities to deliver improved customer service; expand the reach of HSBC.
8. Simplify the organisation and invest in future skills.

Throughout the period from 2018 to 2020, HSCO’s plan assumes its CET1 ratio will be above 14 per cent. Its CET1 ratio has been above this level for the last five quarters.

To achieve these financial targets in the period from 2018 to 2020, HSBC aims to deliver mid-single digit growth in revenue, low to mid-single digit growth in operating expenses, and c.1-2 per cent annual growth in RWAs. HSBC expects this to result in an improvement in reported revenues as a percentage of reported average RWAs from c.5.9 per cent in 2017 to c.7 per cent by 2020.

John Flint, Group Chief Executive, 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.”