HSBC CFO Highlights Hong Kong, Wealth Growth as Exits Fund Investment

Key Points

• HSBC is prioritizing growth in Hong Kong, wealth management, trade finance and the U.K. Hong Kong remains highly profitable, while wealth management generated $22 billion in net new money during the second quarter.
• The bank’s 15 planned business exits will create revenue headwinds of roughly $2 billion, but release about $1.1 billion in costs for reinvestment in core businesses. HSBC also raised its Simplification Saves target to $2 billion from $1.5 billion.
• HSBC plans to maintain a 50% dividend payout ratio, fund organic growth and use excess capital for share buybacks. CFO Pam Kaur is departing after 13 years, with an orderly handover underway.

HSBC NYSE: HSBC Group Chief Financial Officer Pam Kaur said the bank remains focused on investing in growth while maintaining cost discipline, with Hong Kong, wealth management, trade finance and the U.K. among its priority areas.

Speaking at the Barclays Global Financial Services Conference, Kaur said HSBC’s four businesses were growing and generating returns above the minimum targets the bank set in February. She said the company’s targets are “the minimum to which we manage the bank,” rather than a cap on performance.

Kaur also discussed her planned departure after 13 years at HSBC, including two years as CFO. She said she had completed 40 years in the financial-services industry and believed this was an appropriate time to pursue other leadership opportunities. Kaur said her immediate priorities are ensuring an orderly handover and continuing to advise Group Chief Executive Georges Elhedery on strategic priorities after her CFO tenure.

Hong Kong and Wealth Remain Key Growth Areas

Kaur described HSBC’s Hong Kong operation as a major source of profitability and momentum. While the business reported a roughly 45% return on tangible equity in the second quarter using risk-weighted asset allocations, she said a leverage-exposure-based approach would still produce a return “well into 30% plus.”

She said HSBC continues to see sustained new-customer activity in Hong Kong. The number of new-to-bank customers in July and August remained at the average level recorded during the first half, which Kaur called an encouraging sign for both the market environment and HSBC’s ability to retain share.

HSBC’s wealth-management business also continued to expand across Asia. The bank reported $22 billion in net new money during the second quarter, which Kaur said represented an annualized 8% growth rate.

While China’s policies on outbound investment have drawn investor attention, Kaur said Hong Kong’s status as an international financial center remained supported by the latest Chinese mainland Five-Year Plan update. She said HSBC remained encouraged by participation from retail and corporate customers in Hong Kong’s broader financial ecosystem.

Exits Create Revenue Headwinds but Fund Investment

HSBC has announced 15 business exits since the start of 2025. Kaur said the businesses being exited account for approximately $1.1 billion in costs and roughly $2 billion in revenue.

• The revenue impact in the current year is expected to equal about one-third of the $2 billion total.
• By the end of the following year, the impact is expected to reach about three-quarters of the full amount.
• The effects in 2027 and 2028 are expected to be more concentrated in banking net interest income, reflecting exits including Egypt retail and Australia.

Kaur said the bank is redeploying released costs into core business areas, although the revenue reduction and investment benefits will not necessarily occur in the same quarter. HSBC has also increased its Simplification Saves target to $2 billion from $1.5 billion.

She said HSBC’s cost-to-income ratio was at its lowest level ever. Looking ahead, management expects to continue driving operating efficiencies while considering inflation, growth opportunities and potential variable-pay adjustments if revenue exceeds plan. Kaur said the bank believes it can continue investing while staying within a roughly 3% to 4% cost-growth range over time.

Capital Priorities and Interest-Rate Positioning

Kaur said HSBC generates about 100 basis points of capital per quarter and follows a defined capital-allocation framework. Its first priority is a 50% dividend payout ratio, followed by organic growth investment. For excess capital beyond those uses, share repurchases remain the preferred distribution method, she said.

However, Kaur noted that fluctuations in bond yield curves can affect capital through HSBC’s held-to-collect-and-sell portfolio. She estimated the current impact at around the mid-teens in basis points, though she characterized it as a timing effect that should reverse relatively quickly.

HSBC is also now more hedged and less sensitive to interest-rate changes, Kaur said. While that positioning supports medium- and long-term stability, she said it can limit some short-term benefits from changing rates. Banking net interest income remains a “crown jewel” for the company, but Kaur emphasized that HSBC wants fees and other non-interest income to grow faster as a share of revenue.

Trade, U.K. and Credit Trends

Kaur said trade finance is benefiting from increased Asian export activity and demand for shorter-term, commercially linked lending. She cited year-over-year export growth of 19% in China, 39% in Hong Kong, 51% in Korea and 45% in Taiwan. Trade loans rose 30% year over year to $120 billion, while trade revenue increased 13% to $800 million in the second quarter.

In the U.K., Kaur said HSBC is the third-largest bank by revenue and deposits and remains particularly focused on trade, small and midsize enterprises and international banking. The ring-fenced U.K. business produced a 21% return on tangible equity, with revenue up 5%, lending up 7% and deposits up 4%, she said. David Lindberg, the new U.K. chief executive, and the U.K. CFO are expected to discuss the business with investors in November.

On credit, Kaur said HSBC remains watchful because inflation and elevated interest rates are increasing Stage 3 losses in some lower-end midmarket portfolios. She said direct Middle East-related losses were $34 million at midyear, while the bank had built a $300 million reserve amid the continuing conflict.

In Hong Kong commercial real estate, Kaur said the bank is seeing few new impairments, though some existing impaired loans may require valuation adjustments. She said residential valuations had increased 18% year over year, retail spending had risen for 15 consecutive months, and core office demand was improving. Office properties outside central areas, however, remain under pressure because of excess supply.

About HSBC (NYSE:HSBC)

HSBC Holdings plc is a global banking and financial services organization headquartered in London. Through its subsidiaries and network, the company provides services to personal, commercial and institutional customers, with a particular focus on connecting businesses and investors across international markets.

HSBC's principal activities include retail and wealth banking, commercial banking, global banking and markets, and private banking. Its products and services include current and savings accounts, mortgages, credit and lending, wealth management, investment services, foreign exchange, trade finance, cash management, and capital-markets services.

The company traces its origins to The Hongkong and Shanghai Banking Corporation, which was established in 1865 to finance trade between Asia and Europe.

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