HSBC S'pore continues to invest; incorporation set for H1
Singapore
HSBC continues to invest in Singapore despite slowing business as it's banking on the growing affluent middle classes in the region.
Europe's largest bank is also on track to locally incorporate its retail operations in the first half of this year, said Matthew Colebrook, HSBC head of retail banking and wealth management for Singapore.
UK-based HSBC and Malaysia's Maybank are the two foreign banks with significant retail banking operations here that have yet to incorporate locally. Citibank and Standard Chartered Bank did so in 2005 and 2013 respectively.
"Singapore is a focus of attention for the group," said Mr Colebrook in an update of the bank's retail activities here. The bank targets the high-end retail segment via its flagship Premier international retail banking and wealth management proposition.
An HSBC Premier customer must have a minimum of S$200,000 with the bank or a property loan size of at least S$800,000.
This month, HSBC completed upgrading two branches - Plaza Singapura and Jurong - making a total of eight refurbished branches in the last two years. The bank has 11 branches here and its loan market share is 3.6 per cent.
HSBC has been investing and expanding its reach in Singapore; in June last year, it joined Nets - Singapore's most widely used payment network - giving access for its debit cards to 87,000 points islandwide.
This took place even as HSBC's business has been slowing. Total loans at end-June 2015 fell 8 per cent to US$30.9 billion from US$33.6 billion, led by contractions in mortgages and personal loans. Pre-tax profit fell 11.8 per cent to US$261 million.
Within HSBC's Asia business, Singapore accounts for 8 per cent of lending and 3 per cent of pre-tax profit.
"Singapore is a priority market for HSBC globally, given the international and open nature of its economy and its status as an epicentre for trade, capital and wealth flows for the region," said Mr Colebrook.
"More specifically, we believe Singapore's underlying economic fundamentals are strong, so the investment into our retail business is a long-term strategy for us," he said.
HSBC's loan growth in Asia has slowed since mid-2014 and turned negative in the third quarter of 2015, and growth in net interest income has been even lower over this period, said Moody's in a Jan 18 report on the group's Asian strategy.
"However, this trend is, in part, due to the devaluation of Asian currencies versus the US dollar. HSBC's loan growth has been slower than average for the banking sectors in Hong Kong, mainland China and several of its key markets in recent quarters.
"This is due to its already sizeable loan book but also suggests that the group is focused more on risk control than balance-sheet growth, a positive for its creditors."
Singapore is a top-seven priority market for HSBC globally. The others are Hong Kong, the UK, China's Pearl River Delta, Malaysia, Saudi Arabia and United Arab Emirates.
Singapore has a very important role in the wealth management space, and the bank's international connectivity makes it attractive for affluent clients, said Mr Colebrook.
HSBC Singapore is one of three banking global hubs for offshore Premier clients, he said. These internationally mobile clients are not domiciled in Singapore but like to do their banking here.
The other two hubs are Jersey, which services European clients, and Miami, which takes care of Latin American clients
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