"We are currently taking prudent steps to expand our footprint in Asia," said HSBC executive director Peter Wong in a media briefing in Hong Kong earlier this week. "As the world's economy is shifting its focus from the west to the east, we see huge potential in the Southeast Asian markets, especially in the Greater China and Indonesian regions."
In the first six months of 2009, HSBC booked a profit of $4.5 billion before tax from its businesses in Asia. In percentage terms, Asia accounted for 66% of the bank's global profits, in part attributable to a shortfall in HSBC's North America operations. Wong said that the bank expected that even "after North America's profits have normalised in the long run the Asian region will contribute 40%" of HSBC's earnings. In September HSBC said it is relocating its group chief executive officer, Michael Geoghegan, to Hong Kong, in line with its strategy to focus on emerging markets.
HSBC increased its presence in both urban and rural areas in mainland China and expects to have 100 outlets by the end of this year. The credit card project that the bank launched in 2004 together with China's Bank of Communications has just achieved breakeven and card issuance is expected to continue to grow. This summer HSBC became the first foreign bank to issue renminbi bonds in Hong Kong and to settle cross-border trade in renminbi.
Wong responded to a question about competition in Greater China by referring to the strength HSBC enjoys due to a strong client base. However, he also said that HSBC's senior management closely monitors the market environment and adjusts strategies accordingly. Wong added that the financial cooperation agreement signed between China and Taiwan earlier this week will bring opportunities for the bank's small and mid-sized enterprise business.
Outside the Greater China region, HSBC has become the largest foreign bank in Indonesia with the acquisition of Bank Ekonomi, which doubled its branch network to 209 outlets across 27 cities. "The Indonesian economy is developing quickly as it wasn't hit hard in the financial tsunami last year," Wong said. In India, where HSBC has the largest staff strength across its Asian businesses, HSBC has been identifying targets for acquisitions and expanding its portfolio.
HSBC's nine-month profitability is ahead of expectations, according to Wong, who noted that the bank intends to maintain its edge in Asia and seize the opportunity to further increase revenue from emerging markets.
The briefing concluded with a question regarding HSBC's share price regaining its shine in the Hong Kong market recently (in the past quarter the shares are up 16%). "Of course we are feeling very glad about it," said Wong with a smile, going on to refer to the fact that HSBC is one of the few international banks which did not need to request assistance from the government during the financial crisis last year.
"We have successfully improved our reputation and built a strong brand image. Now that the economy is making its way to recovery, together with our heartening performance in the first three quarters, I am confident that our stock price will continue to reflect these positive signs and investors' growing confidence in us," he added.