With an aim to expand business in Asia, HSBC Holdings plc (HSBC - Free Report) plans to add nearly 700 people in its Asia private banking unit by 2022. Additionally, the company aims to double its Asia-based client assets in eight years, per Reuters.
HSBC’s private banking unit, which caters to the rich, serves clients with more than $5 million of investable assets. On the other hand, those with less than $5 million of assets are served by the bank’s retail banking and wealth management division.
Because of the presence of certain compliance and control failures in HSBC’s Swiss private bank, which the bank admitted to in 2015, it had to face a lot of trouble. It has been taking various initiatives to improve its tax transparency and implement global standards since then.
As the bank focused more on compliance and profitability, its private banking unit contracted footprint and compelled some clients to exit in the past few years.
However, after years of painful restructuring, the bank is now focusing more on growth in the Asia Pacific region. This is because Asia has developed into the world’s most rapidly-growing wealth market. Compared with the West, Asia has higher economic growth, quickly increasing wages and a flourishing entrepreneurial environment that produces rich clients at a faster pace.
Peter Boyles, CEO of HSBC's global private banking business said, “Asia is the key driver for future profitability in the private bank. It's been the driver for growth even through the difficult times and it's always remained profitable.”
Siew Meng Tan, the head of HSBC’s Asia private bank stated that the 700 new employees would include relationship managers, product specialists and family wealth planners.
Notably, Asia accounts for nearly 39% of HSBC's global private banking business, which manages client assets worth $330 billion.
HSBC’s efforts to increase exposure in emerging markets are expected to lead to higher costs in the future that might hurt the bottom line.
Over the past six months, shares of HSBC have lost 12.7% compared with the industry’s decline of 15.6%.
Currently, HSBC has a Zacks Rank #4 (Sell).
A few better-ranked stocks from the finance space are SunTrust Banks, Inc. (STI - Free Report) , On Deck Capital, Inc. (ONDK - Free Report) and Comerica Incorporated (CMA - Free Report) .
SunTrust’s Zacks Consensus Estimate for the current year has been revised 5.6% upward in the past 60 days. Its shares have gained 34.3% in the past 12 months. It currently carries a Zacks Rank #2 (Buy).
On Deck Capital witnessed an upward earnings estimate revision of 38.7% for the current year over the past 60 days. Its share price has increased 69.7% in the past year. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica also has a Zacks Rank of 1. Its Zacks Consensus Estimate for the current year has been revised nearly 5.1% upward in the past 60 days. Its shares have gained 42.9% in the past 12 months.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>