Strategy

HSBC’s Bannister Talks to WealthBriefing about Results and Strategy

Contributing Editor, 2 August 2005

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HSBC Private Bank yesterday reported a 25 per cent year-on-year rise in pre-tax profits to $451 million in the first half of 2005. Assets un...

HSBC Private Bank yesterday reported a 25 per cent year-on-year rise in pre-tax profits to $451 million in the first half of 2005. Assets under management rose 14 per cent in the same time period to $183.2 billion, with net new money increasing by $9.2 billion.

“These are good results and shows we have the systems in place across the global network to grow the business. But beyond this, it shows that our clients are doing well — we are just working with excellent clients,” Clive Bannister, chief executive of HSBC Private Bank, told WealthBriefing yesterday after the release of the bank’s interim results.

The private bank’s results in Asia have been particularly impressive with assets under discretionary management increasing by 85 per cent in the first half. Pre-tax profit rose 50 per cent to $111 million in the first half in Hong Kong and the rest of Asia saw a 48 per cent increase in pre-tax profits to $43 million.

Mr Bannister said the strong results in Asia were due to three factors: a strong inflow of net new money; an increasing onshore presence in the major markets in Asia; and a rich product range.

“HSBC has a strong presence in Asia, which gives us the critical mass to develop our private banking market in the region.”

In Europe, growth was not so strong, where private banking pre-tax profits rose by 13 per cent to $236 million. AUMs also grew by 13 per cent to reach $109.3 billion.

The bank plans regional expansion in France with the opening of further offices, which will compliment the private bank’s regional expansion in the UK.

In contrast, the private bank has been less forthright in its policy in Germany, where there has been ongoing speculation on whether the bank would sell a further share in its local private banking business Trinkaus & Burkhardt to Stuttgart-based Landesbank Baden-Wuerttemberg.

Mr Bannister was not prepared to say much on the subject, but said the bank is in discussions with Trinkaus, of which it owns 73.5 per cent.

On the recent sale of the Belgian-based Bank Dewaay to KBC, Mr Bannister said, at this current juncture for the private bank, the market in the Benelux region is “not mission critical.”

Mr Bannister was happy with the progress of the North American market, saying revenue growth there was at record levels.

The chief executive of the private bank also highlighted the increasing importance of alternative investments among private banking clients. Total client investment in hedge funds reached $25 billion, and HSBC Private Bank was recently named the “third largest global provider of fund of hedge funds” by capital invested by Institutional Investor magazine.

Comments by Mr Bannister and HSBC’s chairman Sir John Bond suggest the private banking business is happy to grow organically for the foreseeable future.

Sir John said HSBC's private banking business, which has absorbed three acquisitions including Bank of Bermuda in 2004, is now "growing extremely well organically".

Pressed on whether the bank might be interested to acquire a mid-sized Swiss private bank, Mr Bannister was more than content with the organic growth being achieved by its Swiss operations and saw no current need to augment this through acquisitions.

Mr Bannister was also at pains to point out the excellent job being done by the private bank’s back office functions such as human resources, IT and finance. “You have to see our success as a joint effort from everyone — and the manufacturing part of the business has been particularly important.”

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