Five things to look out for in HSBC’s strategy update

HONG KONG (Reuters) – HSBC Holdings PLC will update its “transformation” plan announced a year ago on Tuesday, when the Asia-focused lender will also report annual results.

As part of its latest strategy, the bank said in February last year that it would reduce its investment banking operations and regenerate its businesses in the United States and Europe and that 35,000 jobs would be cut.

HSBC’s pretax profits for 2020 are expected to fall 38% to $ 8.3 billion, according to analysts’ estimates compiled by the bank, due to the impact of the COVID-19 pandemic.

Here are five key things to look for in the new plan to revitalize growth –

1. How does HSBC promote tax revenue?

The bank has promised details of its plans to make more money from the taxes it earns from selling products to customers than it does by kissing the difference between the flat rates it offers to savers and costing lenders.

This could include selling more products to wealth management clients, charging corporate messengers in various ways, and possibly even charging sales messengers for basic banking services.

2. What do the plans for doubling down on China and Asia mean?

HSBC plans to refocus resources from elsewhere on what it describes as “Asia’s high-return industry”, but investors want to know what this means in use for markets and business lines.

Politics could make this more difficult. HSBC has been attacked by British lawyers for helping Hong Kong police with investigations into anti-democratic activists, including the freezing of some bank accounts.

Chief executive Noel Quinn said last month that the bank had to comply with police demands and could not “choose which laws to follow”.

3. Will HSBC start paying an installment?

HSBC has not announced a split from the third quarter of 2019, led by the Bank of England. This angered retail investors in Hong Kong who had unsuccessfully tried to change the policy.

The regulator has since lifted the ban, and British rival Barclays said on Thursday it would pay a installment of one penny. However, despite analysts ’expectations of its 2020 yields, Barclays’ shares fell as a vague outlook in the absence of profit targets leaving investors concerned.

HSBC investors look beyond the day’s numbers for firm promises toward a better return and a positive outlook for key economies.

4. How will HSBC reduce its US and European footprint?

HSBC’s French high street banking business is up for sale, but it has been difficult to find a buyer.

The market expects an update on whether HSBC has succeeded in finding a buyer on the terms it accepts, or whether it will try to bring the industry down gradually.

HSBC will also provide details on how it will accelerate existing efforts to reduce assets, staff and branches in the U.S., which accounted for 0.5% of the UK’s pre-tax profit. group in the first half of last year.

5. More job cuts along the way?

HSBC employed 307,000 people at the end of 2010. Bank executives said last year that they aimed to reduce the number by 235,000 to closer to 200,000 by 2023. Investors want to know the new plan will mean deeper cuts. As a result of almost every new strategy that HSBC has launched in the last decade, fewer people are employed by the bank.