Rumours that HSBC Malta would be put up for sale fell flat on Monday, with group CEO John Flint telling investors the bank’s global restructuring phase would now give way to an increased focus on growth.
Talk of the global bank reassessing its operations in smaller markets such as Malta did not feature even once in a 90-minute conference call Mr Flint held with investors and analysts.
Instead, Mr Flint and the holding company’s top managers highlighted HSBC group’s decision to focus on fuelling growth, most notably in its Asian markets, over the next two years.
Uncertaintly over HSBC’s future in Malta had picked up steam in April after Bloomberg, citing bank sources, said HSBC was thinking of shutting its operations in small markets such as Malta, Bermuda and Uruguay.
An HSBC spokeswoman had declined to comment on those rumours, telling Bloomberg that the bank would update investors at or before its first-half earnings report.
Mr Flint’s conference call on Monday was a first opportunity to tell investors of his plans for the bank’s smaller operations. But rather than talk of restructuring or sales, the CEO told investors that “it is time for HSBC to get back into growth mode”.
Since 2011, HSBC has quit 20 markets – including large ones such as Brazil – and sold off around 100 businesses, in a retrenchment strategy aimed at making the bank which has traditionally billed itself as the “world’s local bank” smaller, simpler and nimbler.
With the bank’s smaller operations representing a drop in the ocean of the multinational bank’s books, analysts had started asking whether it made sense for HSBC to run full-scale operations in these markets.
HSBC Malta, for instance, banked a €50 million pre-tax profit in 2017, a year when the global HSBC banking group pocketed €14.57 billion before tax.
In relative terms, the bank's Malta operation outperforms the bank's global average, with a return on equity of 11.7%. That, however, was down from 13.1% the previous year.
Pivot to Asia
As part of its retrenchment strategy, HSBC has steadily been pivoting further towards Asia - a plan the bank will be doubling down on over the next two years as a key growth driver.
Growth in Hong Kong will feature heavily, with the bank also expecting to double its revenues in the Pearl River Delta by 2020.
HSBC is shooting for mid-single digit revenue growth over the next two years, with dividends expected to remain stable and the bank setting itself a global target of 11% return on tangible equity by 2020.
The bank will be keeping a retail presence within the US and will also make a concerted effort to turn around its business there, where it continues to lag behind competitors.
Europe-wise, Mr Flint said he wants to see the bank grow its UK business and create a retail hub in France.