HSBC Holdings Barclays 24th Annual Global Financial Services Conference

I just didn't check. No, I think we're sorted. Yeah. Leave the door open. Thank you, everyone. Welcome to the European track at the Barclays Global Financial Services Conference in New York. My name is Aman Rachha. I'm head of U.K. and Irish banks. Delighted to be joined this morning by Pam Kaur, HSBC Group CFO. Pam, thank you very much for your time. We really appreciate you making your way over here.

Thank you, Aman. A real pleasure to be here.

Okay, cool. Let's kick things off. I've got the privilege of speaking to you for the first time after your news last week. You announced your plan to retire from HSBC after 13 years, including two years in the CFO role. Why now? Thank you, Aman.

Firstly, last week, exactly on September 8, I completed 40 years in the industry, and in 2027, I'll be finishing 14 years in HSBC, including two years as CFO. I'm really pleased that the bank is in a very strong position, both financially and strategically. I'm proud of the progress we've made on simplification, on our exits of non-core businesses, but most importantly, embedding the discipline for costs and investment prioritization, and that has delivered performance as well as value. For me, it seems now the right time to look at other opportunities in leadership roles where I can use the experience that I've gained in these last 40 years and continue to deliver value.

But for now, my immediate priority, as always, remains HSBC, both in terms of having an orderly transition with my successor, so that what we have built on to position ourselves well for future growth, which I am very confident about. And subsequent to that, I will continue as an advisor to our group CEO, Georges, on key strategic priorities. So beyond that, I have a very open mind, but I am excited, this is not a retirement, for new opportunities, and fundamentally, to continue to make meaningful contributions in whatever role I take. And the key driver for that would be to enhance value proposition wherever I go. But just to be clear, no announcement as of now.

So it doesn't sound like you're going to be on the beach after eight months.

Not at all. I don't think I'm the kind of person who'll be on the beach for a very, very long time.

Okay. All right. Well, thanks for addressing that. So if we turn to the HSBC, one of the key consistent themes recently has been the richness of the growth opportunity ahead of you, particularly across Asia and particularly your wealth business. How are you thinking about balancing growth investment against returns? And where are you most focused when allocating capital and cost today?

Firstly, we are very pleased that all four of our businesses are growing, and they are delivering returns above the minimum targets we set for ourselves in February. We have higher revenue opportunities, but we also have a few cost levers which we have been successful in pulling, both in terms of upgrading what we are getting from simplification.

The opportunities of cost redeployment from the exits that have been happening at pace. Having said all that, in the near term, our focus is much more on Hong Kong and wealth for the opportunities there, as well as to continue to accelerate the multi-year programs that we have in place in a range of areas.

Whether it is on data AI, whether it is with regard to the SME business in the U.K. or indeed in wholesale transaction banking in FX trade payments and security services.

From a capital perspective, I just want to remind everyone, we are fundamentally a relationship bank, so we are there to support our customers and their demands. But it has to be at the right level of return and also within our well-established risk appetite.

Mm-hmm. You mentioned Hong Kong. Your business there is exceptional. You are delivering profitability of around 45% ROTE in Q2. Strong growth is obviously supported by robust cross-border flows, particularly into your wealth business. At the same time, there has been a lot of focus on China's tightening of outbound investment policies and questions around sustainability of said flows. How do you see the outlook for the Hong Kong franchise, and how concerned should investors be about any meaningful impact around China's tightening?

Firstly, we are very pleased with the Hong Kong business. Just to give you a context, the 45% return on tangible equity is because we do the allocation based upon RWAs. Hong Kong is a very rich deposit business for us, and if we did the same tangible equity allocation based upon leverage exposure, then it will still be a very healthy ROTE well into 30% plus. Just want to give you that context. It is not always 45, but frankly, a mid-30s number on ROTE is also a very healthy number. From a Hong Kong business going forward, we are very encouraged by the continuing momentum we see, both for retail and corporate customers, in terms of participating in the ecosystem for Hong Kong, and Hong Kong's very strong position as the international financial center.