HSBC Revamps Business Model as Interest Rates Slide
(30 October 2020 – Hong Kong) HSBC signalled it would overhaul its business model, switching its main source of income from interest rate to fee-based businesses, as quarterly profit declined by $1.8 billion (37 percent) compared to the same period last year.
HSBC will also look at how it can bring in more fee income from corporate customers, having done well helping clients raise money through bond and equity financing during the coronavirus crisis.
The Bank will focus on three main strategic priorities:
- Growth acceleration in Asia
- Continued digitalisation
- Further restructuring
"We expect lower global interest rates to continue to put pressure on net interest income,” said group chief executive Noel Quinn. "Based on current interest rates, we expect further modest net interest income headwinds in 4Q20, with some stabilisation as we move into 2021.”
"We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines towards fee-generating businesses, and further reducing our operating costs,” Quinn said. “We also intend to increase our rate of investment in Asia, particularly in wealth, the Greater Bay Area, south Asia, trade finance and sustainable finance”.
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