For more than 150 years, HSBC, has relied on Shanghai & Hong Kong as its core markets to finance trade between Europe & Asia. In 2021, HSBC made an impressive USD 21.9 billion profit, with 44% of that coming from Hong Kong & China alone.
Customers from these two regions accounted for more than 33% of their overall customer base. However, the HSBC profit machine has been hit hard, with profits for the first half of 2022 dropping by ~30% YoY due to several issues that have arisen in its relationship with China.
The most public incident was when Chinese media outlets accused HSBC of providing information to US authorities in the legal case involving Huawei Technologies’ chief financial officer, which led to the bank issuing a public denial that it had “framed” the telecom giant.
HSBC also drew criticism from Western countries for its stance on Hong Kong’s national security law, as they ended up publicly supporting the legislation. Its business has been further hit on the back of China's crackdown on industries like technology & real estate.
Amidst all this turmoil in China, Mark Tucker, Chairman of HSBC, met with the leader of India's G20 preparation committee in December 2022 while Noel Quinn, CEO of HSBC visited several clients in India back in September.
Recent visits to India are a testament to growing number of international customers investing here. These high-profile trips demonstrate an increased level of interest in doing business with India. India appears more promising now may be an opportune time to look away from China
At the Asian Financial Forum conference in January 2023, Tucker proclaimed that Asia's growth was not limited to Hong Kong & China. He highlighted India as a particularly attractive market with potential for 20-30 year growth runway, similar to what China experienced during 1990s
The bank is now targeting the ultra-rich in India, where the wealth held by billionaires has crossed USD 400 billion from USD 148 billion in 2016. It also plans to launch an onshore private banking service in the India subcontinent this year.
Its recent acquisition of L&T Investment Management in India, with~USD 11 billion in assets under management, will help it boost its presence in the country and attract more wealthy clients who want to keep their money out of public markets
The move also demonstrates that it’s willing to take risks outside of its core markets with more acquisitions in the pipeline.
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