As profits dropped due to the global pandemic in 2020, global financial institution focuses on agility and digital mindset
HSBC has reported profit after tax down 30 per cent to US$6.1bn and reported profit before tax down 34 per cent to US$8.8bn from higher expected credit losses and other credit impairment charges (‘ECL’) and lower revenue, partly offset by a fall in operating expenses.
However, in its recently released annual results for 2020, Noel Quinn group CEO said the significant increase in digital engagement from customers and the enhanced focus on the environment has led the bank to align its strategy accordingly, by equipping staff to work from home.
“Our investment in our digital capabilities – both in 2020 and in previous years – enabled our customers to access more services remotely, and we worked closely with our regulators around the world to open new digital channels in a safe and secure way,” he stated. “In October, we announced our ambition to become a net zero bank by 2050, supporting customers through the transition to a low-carbon economy and helping to unlock next-generation climate solutions.”
Quinn noted if the Covid-19 pandemic provided a shock to the system, a climate crisis has the potential to be much more drastic in its consequences and longevity.
“We are therefore stepping up support for our clients in a material way, working together to build a thriving low-carbon economy and focusing our business on helping achieve that goal,” he stated. “The actions we outlined in February 2020 are largely on track or ahead of where we intended them to be, despite the complications of the pandemic. Our business is more streamlined than it was a year ago, with three global businesses instead of four and increased back-office consolidation.”
Quinn stated HSBC intended to build a dynamic, efficient, and agile global bank with a digital-first mindset.
Plans for this includes:
- Focus on and invest in the areas in which we are strongest. In Wealth and Personal Banking, we aim to become a market-leader for high net worth and ultra-high net worth clients in Asia and the Asian diaspora, and to invest in our biggest retail markets where the opportunity is greatest. In Commercial Banking, we want to remain a global leader in cross-border trade, and to lead the world in serving mid-market corporates internationally. In Global Banking and Markets, we intend to invest to capture trade and capital flows into and across Asia, while connecting global clients to Asia and the Middle East through our international network.
- Increase the pace at which we digitise HSBC through higher levels of technology investment. “This underpins everything that we want to achieve,” noted Quinn. “It is how we intend to win new customers and retain them, to become more agile and efficient, to create richer, seamless customer journeys, and to build strong and innovative partnerships that deliver excellent benefits for our customers.” HSBC intends to meet the growing market need for sophisticated, robust and rapid payment solutions, and to apply digital solutions to analogue services, such as trade. “We therefore intend to protect technology investment throughout the cycle, even as we reduce spending elsewhere,” he stated.
- Energise HSBC for growth through a strong culture, simple ways of working, and by equipping its colleagues with the future skills they need. Giving life to purpose will be critical to building the dynamic, entrepreneurial, and inclusive culture that we want to create, as will removing the remaining structural barriers that sometimes stop our people from delivering for its customers. “We need to change the way we hire to build skills and capabilities in areas that are different to what we have needed historically, including data, artificial intelligence, and sustainable business models,” stated Quinn. “Our expanded HSBC University will also help to upskill and reskill our people, while fostering more of the softer skills that technology can never replace.”
- Help HSBC customers and communities to capture the opportunities presented by the transition to a low-carbon economy. Accelerating this transition is the right thing to do for the environment, but also the right thing commercially. “We intend to build on our market-leading position in sustainable finance, supporting our clients with US$750bn to US$1tn of sustainable financing and investment over the next 10 years,” noted Quinn. “We also intend to unlock new climate solutions by building one of the world’s leading climate managers – HSBC Pollination Climate Asset Management – and helping to transform sustainable infrastructure into a global asset class.” These will help HSBC to achieve its ambition to align its portfolio of financed emissions to the Paris Agreement goal to achieve net zero by 2050.