Why Hong Kong’s banks are targeting growth again after years of cost-cutting

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The HSBC and Standard Chartered buildings in Hong Kong, the largest market by revenue for both banks. Photo: Bloomberg

Alun John

Published: 7:48am, 5 Mar 2018Updated: 7:48am, 5 Mar 2018

“We’re now poised for growth,” said Standard Chartered group chief executive Bill Winters during a call with analysts last Tuesday, after the bank announced a rise in profits for 2017.

His statement exemplifies a sudden change of tack among Hong Kong’s big lenders after years of focusing on cost-cutting and balance sheet reduction.

Standard Chartered was one of four major Hong Kong high street banks to report their full-year profits in the last two weeks, and whose management has finally started to talk about growth again, along with across-the-board increases in their earnings.

“Both in Hong Kong and globally there is a sense that we have reached a tipping point as banks have shrunk to beautify themselves, and can now start thinking about growing again,” said Keith Pogson, senior partner for financial services at EY. “CEOs also like talking about growth, and they are fed up with discussing cost controls, capital and compliance.”

In November 2015, Standard Chartered launched a three-year plan to remove US$2.9 billion of costs from its business as it reported a loss for the third quarter thanks to ill-judged expansion. The bank said in its 2017 results that it had realised 85 per cent of those savings.