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HSBC Holdings (HSBC) Aims Expansion in Asia, Hires New Staff

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Zacks Equity Research
·3 min read
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HSBC Holdings, plc HSBC is on an expansion spree as it plans to hire nearly 5,000 wealth planners in Asia.The news was reported by South China Morning Post.

The bank has been undertaking efforts to position itself as the top bank for high net worth and ultra-high net worth clients in Asia. Along with hiring more than 5,000 people in its wealth management unit over the next five years, HSBC will inject $3.5 billion worth capital, of which, approximately, two-thirds will be used to bolster the bank’s distribution competencies, via new hires and technology improvements.

HSBC also has plans to shift capital from the underperforming businesses in Europe and the United States, to invest $6 billion in total in Asia over a period of five years. The capital will mostly cater to amplify its wealth management business since management intends to target wealthy clients in mainland China, Hong Kong, Singapore as well as other parts of the region.

HSBC is also contemplating to expand its footprint in mainland China. Last year, the bank initiated a digital-first, hybrid financial management platform — HSBC Pinnacle — in mainland China to bank on the increasing wealth in the region. The bank hired 200 wealth managers in Shanghai, Hangzhou and Shenzen in 2020, and now intends to add another 600 this year.

Greg Hingston, regional head of HSBC’s wealth and personal banking business, said “Asian wealth onshore and overseas, offers one of the most compelling growth opportunities today, we are connecting Asian clients to the world and the world to Asian expertise as we see greater client demand to diversify into wealth.”

HSBC’s wealth is also poised to benefit from the further integration between Hong Kong and other cities in the Greater Bay Area, including the intended Wealth Connect cross-border scheme.

HSBC largely generates revenues from Asia. The bank stated that, in totality, Asia accounts for half of HSBC’s $1.6 trillion in balances in wealth management and 65% of the group’s wealth revenue. With an aim to expand the bank’s wealth management business arm, HSBC’s top line is likely to further diversify geographically.

Our Viewpoint

Plans of expansion in Asia will likely help HSBC offset some of the impacts of low interest rates on the bank’s top line and thus, enhance profitability. Nevertheless, competition for capital-light and fee-generating sustainable businesses in Asia might intensify over the medium term. The latest move puts HSBC up against non-Asian competitors, such as Bank of America BAC, Credit Suisse Group CS and UBS Group AG UBS.

Shares of HSBC have lost 12% over the past year against the industry’s growth of 5.8%.

Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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