1 00:00:00,200 --> 00:00:03,840 Speaker 1: HSBC Chief executive Officer Noel Quinn No, good morning. Thank 2 00:00:03,880 --> 00:00:07,320 Speaker 1: you so much for joining us so early. When you 3 00:00:07,320 --> 00:00:09,960 Speaker 1: look at your results, they're strong. Are you very optimistic 4 00:00:09,960 --> 00:00:10,680 Speaker 1: about the future. 5 00:00:12,640 --> 00:00:14,960 Speaker 2: I'm very pleased, Francine, and thank you for having me 6 00:00:15,080 --> 00:00:17,480 Speaker 2: with strong results in the first half. I mean, I 7 00:00:17,560 --> 00:00:20,360 Speaker 2: think that those results are a function of good revenue 8 00:00:20,400 --> 00:00:23,560 Speaker 2: growth across the globe. All of our global businesses has 9 00:00:23,600 --> 00:00:26,160 Speaker 2: strong revenue growth. All of the product lines within those 10 00:00:26,200 --> 00:00:30,280 Speaker 2: businesses strong revenue growth, but also all geographies contributed to 11 00:00:30,320 --> 00:00:33,360 Speaker 2: that performance. So I'm pleased with the outcome. It's a 12 00:00:33,400 --> 00:00:37,040 Speaker 2: twenty one point seven billion dollar PBT which produces a 13 00:00:37,080 --> 00:00:40,400 Speaker 2: reported ROATIE of twenty two point four percent, But to 14 00:00:40,440 --> 00:00:43,000 Speaker 2: be fair, I need to back out two notable items 15 00:00:43,000 --> 00:00:47,080 Speaker 2: in Q one which boosted that return. But underlying then, 16 00:00:47,280 --> 00:00:50,040 Speaker 2: excluding those, it's still a return on tangible equity of 17 00:00:50,080 --> 00:00:53,840 Speaker 2: eighteen point five percent. That's a very strong performance. Our 18 00:00:53,880 --> 00:00:56,920 Speaker 2: confidence is high on the future, which is why we've 19 00:00:56,960 --> 00:01:00,960 Speaker 2: changed our ROATY guidance going forward. We've increased it from 20 00:01:01,000 --> 00:01:04,959 Speaker 2: the twelfth plus guidance we had before to a guidance 21 00:01:04,959 --> 00:01:07,959 Speaker 2: of mid teens for twenty twenty three and twenty twenty four, 22 00:01:08,600 --> 00:01:11,000 Speaker 2: and I'm really pleased that we were able to, because 23 00:01:11,000 --> 00:01:14,119 Speaker 2: of our strong capital generation, commit to a further ten 24 00:01:14,200 --> 00:01:19,000 Speaker 2: cents dividend interim dividend for Q two and an additional 25 00:01:19,040 --> 00:01:22,839 Speaker 2: two billion dollar up to two billion dollar buyback, which 26 00:01:22,840 --> 00:01:25,520 Speaker 2: we intend to complete in the next three months. So 27 00:01:25,600 --> 00:01:28,600 Speaker 2: that's a good outcome. But I do want to say 28 00:01:28,640 --> 00:01:32,920 Speaker 2: it's broad based across all geographies and across all business lines. 29 00:01:34,240 --> 00:01:36,640 Speaker 1: No, from the outside, it seems you're promoting and putting 30 00:01:36,680 --> 00:01:39,800 Speaker 1: a lot of focus on your business in India within Asia. 31 00:01:39,920 --> 00:01:42,400 Speaker 1: Is there a slight pivot away from China to focus 32 00:01:42,440 --> 00:01:42,920 Speaker 1: on India. 33 00:01:44,400 --> 00:01:47,360 Speaker 2: No, we're looking to invest in all of Asia. We 34 00:01:47,400 --> 00:01:50,960 Speaker 2: see great opportunities still in China here in Hong Kong, 35 00:01:51,280 --> 00:01:55,000 Speaker 2: but also we see opportunities within India and Singapore and 36 00:01:55,120 --> 00:01:58,760 Speaker 2: Singapore not just for Singapore alone, but Singapore and its 37 00:01:58,760 --> 00:02:03,000 Speaker 2: gateway into Asia. So we're investing equally between all parts 38 00:02:03,000 --> 00:02:07,760 Speaker 2: of Asia, and we're seeing good, good performance across the 39 00:02:07,800 --> 00:02:11,480 Speaker 2: whole of Asia. But also we're investing in new business 40 00:02:11,480 --> 00:02:14,079 Speaker 2: lines for us. So I think in the past we've 41 00:02:14,160 --> 00:02:17,760 Speaker 2: underinvested in our wealth business across Asia. We had a 42 00:02:17,880 --> 00:02:20,680 Speaker 2: very good business here in Hong Kong, we invested in that, 43 00:02:21,440 --> 00:02:24,480 Speaker 2: but we didn't invest enough in mainland China, or in 44 00:02:24,520 --> 00:02:27,760 Speaker 2: Singapore or in India, and we're correcting that now and 45 00:02:27,800 --> 00:02:29,760 Speaker 2: you can see the evidence of that in these results. 46 00:02:29,800 --> 00:02:32,800 Speaker 2: You know, we in Asia we took in twenty seven 47 00:02:32,800 --> 00:02:35,360 Speaker 2: billion dollars in net new invested assets on behalf of 48 00:02:35,360 --> 00:02:39,120 Speaker 2: our clients, and that you know, if you look globally, 49 00:02:39,480 --> 00:02:41,880 Speaker 2: in the last twelve months, we took in seventy five 50 00:02:41,919 --> 00:02:44,800 Speaker 2: billion dollars in net new invested assets into our wealth business. 51 00:02:45,320 --> 00:02:47,880 Speaker 2: That's a function of the investment program we started over 52 00:02:47,919 --> 00:02:48,560 Speaker 2: two years ago. 53 00:02:49,760 --> 00:02:52,440 Speaker 1: So how active are you in helping, for example, finance 54 00:02:52,560 --> 00:02:54,639 Speaker 1: still some of the built and road projects. 55 00:02:56,200 --> 00:02:58,000 Speaker 2: I mean, we look at all of those projects that 56 00:02:58,000 --> 00:03:01,079 Speaker 2: are taking place, all of the beginning frastructure projects. We're 57 00:03:01,120 --> 00:03:05,480 Speaker 2: very particularly focused at the moment on infrastructure projects around sustainability, 58 00:03:06,160 --> 00:03:10,440 Speaker 2: new hydrogen plans, new wind and solar waste to decarbonize. 59 00:03:10,440 --> 00:03:14,040 Speaker 2: So we're working with our clients across all of Asia 60 00:03:14,080 --> 00:03:17,640 Speaker 2: book globally. We've done some big transactions as well in 61 00:03:17,680 --> 00:03:21,400 Speaker 2: the Middle East where we're looking to help clients invest 62 00:03:21,440 --> 00:03:25,680 Speaker 2: in the new technology to build the new, greener economy 63 00:03:25,720 --> 00:03:28,160 Speaker 2: of the future. So we look at them on a 64 00:03:28,200 --> 00:03:32,040 Speaker 2: project by project basis, and some of them are within 65 00:03:32,919 --> 00:03:35,560 Speaker 2: the Silk Road the Belting Road initiative, but some of 66 00:03:35,560 --> 00:03:37,440 Speaker 2: them will be outside of that. Many of them will 67 00:03:37,440 --> 00:03:38,080 Speaker 2: be outside. 68 00:03:39,840 --> 00:03:42,440 Speaker 1: No, No, how worried are you about Chinese real estate? 69 00:03:42,640 --> 00:03:45,000 Speaker 1: And actually, if you look at what you've announced today, 70 00:03:45,520 --> 00:03:48,240 Speaker 1: developments could be worse than what you're expecting, and will 71 00:03:48,240 --> 00:03:51,440 Speaker 1: you have to take more, you know, more fresh charges 72 00:03:51,440 --> 00:03:52,840 Speaker 1: against some of your exposure there. 73 00:03:54,520 --> 00:03:57,920 Speaker 2: I think what we announced today was we do a 74 00:03:57,960 --> 00:04:00,840 Speaker 2: scenario on what a potential plausible do inside could be 75 00:04:00,920 --> 00:04:04,400 Speaker 2: on that. We're not predicting that. We scenario plan that. 76 00:04:04,840 --> 00:04:08,160 Speaker 2: We did take some additional provisions in quarter two, but 77 00:04:08,840 --> 00:04:12,080 Speaker 2: they were relatively manageable within our overall ECL charge. I 78 00:04:12,120 --> 00:04:14,400 Speaker 2: think we took about three hundred million in the first 79 00:04:14,440 --> 00:04:16,600 Speaker 2: half of this year. That was top up on some 80 00:04:16,680 --> 00:04:20,760 Speaker 2: existing provisions. But if I look at my overall ECL 81 00:04:20,839 --> 00:04:22,719 Speaker 2: charge for the first half of the year, it was 82 00:04:22,760 --> 00:04:26,200 Speaker 2: one point three billion, and that absorbed commercial reader state 83 00:04:26,279 --> 00:04:29,760 Speaker 2: in China, specifically on real estate in China. It will 84 00:04:29,800 --> 00:04:33,599 Speaker 2: be a challenge in six twelve months. The industry still 85 00:04:33,640 --> 00:04:37,279 Speaker 2: has some challenges ahead. We believe we're well provisioned. We're 86 00:04:37,279 --> 00:04:39,719 Speaker 2: comfortable with the provisioning we have at the half year, 87 00:04:40,320 --> 00:04:43,320 Speaker 2: and we'll have to wait and see how the policy 88 00:04:43,360 --> 00:04:48,359 Speaker 2: measures continue to adopt adapt. And what is really challenging 89 00:04:48,400 --> 00:04:50,760 Speaker 2: in the real estate market in China is a lack 90 00:04:50,800 --> 00:04:53,880 Speaker 2: of demand, and that's really where I think the solution 91 00:04:54,080 --> 00:04:56,200 Speaker 2: to the challenges will come from. 92 00:04:56,760 --> 00:04:59,719 Speaker 1: There's been a long silence, a long long silence from Pingang. 93 00:05:00,160 --> 00:05:04,640 Speaker 1: Reasonable to assume that you've won the argument about HSBC's future. 94 00:05:06,000 --> 00:05:08,560 Speaker 2: Well, listen, we continue to have dialogue with Pingang, as 95 00:05:08,560 --> 00:05:10,880 Speaker 2: we do with all institutional shareholders, and we have done 96 00:05:10,920 --> 00:05:15,160 Speaker 2: since the AGM. But the AGM was conclusive. It delivered 97 00:05:15,160 --> 00:05:19,960 Speaker 2: a very conclusive outcome on the debate around restructuring. We've 98 00:05:19,960 --> 00:05:22,760 Speaker 2: moved on from that now we've very much focused on performance. 99 00:05:23,720 --> 00:05:26,400 Speaker 2: We also know that that's a big focus for Pingang, 100 00:05:26,480 --> 00:05:29,640 Speaker 2: as it is for all institutional shareholders, all shareholders, including 101 00:05:29,680 --> 00:05:32,279 Speaker 2: the retail shareholders here in Hong Kong, and I think 102 00:05:32,320 --> 00:05:35,599 Speaker 2: the first six months results are testament to our focus 103 00:05:35,640 --> 00:05:37,599 Speaker 2: on that and the work we've done over the past 104 00:05:38,160 --> 00:05:42,279 Speaker 2: three years. Strong revenue growth, tight cost of discipline, good 105 00:05:42,360 --> 00:05:44,919 Speaker 2: capital management, over one hundred and twenty eight billion dollars 106 00:05:45,080 --> 00:05:47,760 Speaker 2: of unproductive r W ways taken out over the past 107 00:05:47,760 --> 00:05:50,800 Speaker 2: three years, and we've very much focused on our core 108 00:05:50,839 --> 00:05:54,320 Speaker 2: strengths and the results today are evidence of that. An 109 00:05:54,360 --> 00:05:58,000 Speaker 2: eighteen percent return on tangible equity with good strong capital 110 00:05:58,040 --> 00:06:03,120 Speaker 2: generation going forward, with the prospect of more dividend and 111 00:06:03,160 --> 00:06:06,080 Speaker 2: more return coming from that performance. That's the important thing 112 00:06:06,080 --> 00:06:06,840 Speaker 2: I'm focused on. 113 00:06:07,720 --> 00:06:09,480 Speaker 1: But so what are you reading at the moment that 114 00:06:09,520 --> 00:06:12,799 Speaker 1: ping Aang can come back and actually give you half 115 00:06:12,800 --> 00:06:14,919 Speaker 1: on how they see the future of a HSBC or 116 00:06:14,920 --> 00:06:16,960 Speaker 1: of when you say you've moved on, have they also 117 00:06:17,000 --> 00:06:18,080 Speaker 1: moved on from this argument? 118 00:06:19,320 --> 00:06:21,640 Speaker 2: Well, that is a matter for Pingang, so it's not 119 00:06:21,680 --> 00:06:23,560 Speaker 2: fair for me to comment on their behalf. But I 120 00:06:23,560 --> 00:06:27,520 Speaker 2: think the AGM decision was very decisive and conclusive. The 121 00:06:27,640 --> 00:06:31,680 Speaker 2: vote was very clear, and I believe that matter is 122 00:06:31,720 --> 00:06:35,320 Speaker 2: now behind us. We are very very much focused on performance, 123 00:06:35,880 --> 00:06:38,120 Speaker 2: so that matter is now closed from the point of 124 00:06:38,200 --> 00:06:39,240 Speaker 2: view of HSBC. 125 00:06:40,920 --> 00:06:44,960 Speaker 1: What does the decision to downsize your London headquarters tell 126 00:06:45,040 --> 00:06:46,599 Speaker 1: us about your commitment to the UK. 127 00:06:48,240 --> 00:06:51,359 Speaker 2: We're absolutely committed to the UK and our decision on 128 00:06:51,440 --> 00:06:54,200 Speaker 2: premises in the UK is a function frankly, of some 129 00:06:54,240 --> 00:06:56,680 Speaker 2: of the reduction in costs that we've done over the 130 00:06:56,720 --> 00:06:59,599 Speaker 2: past three to four years. It's a function of changing 131 00:06:59,640 --> 00:07:02,120 Speaker 2: working passens and it's a function of some of the 132 00:07:02,160 --> 00:07:05,599 Speaker 2: offshoring that we've done. So our need for premises in 133 00:07:05,600 --> 00:07:09,160 Speaker 2: the UK is less today than it was three or 134 00:07:09,160 --> 00:07:13,400 Speaker 2: four years ago. So our choice on where we relocated 135 00:07:13,400 --> 00:07:16,680 Speaker 2: the head office wasn't a decision between Canary Wharf and 136 00:07:16,720 --> 00:07:20,240 Speaker 2: the city. It was a decision based on available premises 137 00:07:21,040 --> 00:07:24,840 Speaker 2: somewhere around twenty twenty six and twenty twenty seven that 138 00:07:24,960 --> 00:07:28,280 Speaker 2: had the capacity, but not too much capacity to absorb 139 00:07:28,320 --> 00:07:32,040 Speaker 2: the people we wanted. So, frankly, we needed a build 140 00:07:32,080 --> 00:07:34,640 Speaker 2: in half the size of Canary Wharf and there aren't 141 00:07:34,680 --> 00:07:37,320 Speaker 2: that many buildings that were available. This was not a 142 00:07:37,400 --> 00:07:40,360 Speaker 2: decision between the City or Canary Wharf. It was a 143 00:07:40,400 --> 00:07:43,160 Speaker 2: practical decision based on property availability. 144 00:07:44,760 --> 00:07:48,880 Speaker 1: Given where we are now worldwide and some of I 145 00:07:48,880 --> 00:07:51,600 Speaker 1: guess the influencers across the world, do you say your 146 00:07:51,640 --> 00:07:56,680 Speaker 1: reasons for remaining in the UK are actually decreasing. No. 147 00:07:56,920 --> 00:07:58,680 Speaker 2: I think UK is a very good place to have 148 00:07:58,720 --> 00:08:02,200 Speaker 2: a headquarter for a global institution. It covers all the 149 00:08:02,240 --> 00:08:05,360 Speaker 2: time zones well it's a good environment to operate in 150 00:08:05,440 --> 00:08:09,800 Speaker 2: with lots of professional services to support an organization. Remember, 151 00:08:09,920 --> 00:08:12,880 Speaker 2: we're a global business. We have to have a headquarter somewhere, 152 00:08:12,880 --> 00:08:14,920 Speaker 2: and the UK has been a good headquarter for us. 153 00:08:15,920 --> 00:08:18,000 Speaker 2: But I'm also at the moment in our headquarters in 154 00:08:18,080 --> 00:08:20,240 Speaker 2: Hong Kong, and in a few weeks time, I'll be 155 00:08:20,320 --> 00:08:22,560 Speaker 2: in our headquarters in the Middle East. So you know, 156 00:08:23,080 --> 00:08:26,520 Speaker 2: we're a global organization and there has to be a 157 00:08:26,560 --> 00:08:29,360 Speaker 2: place that where you're registered, and the UK is a 158 00:08:29,400 --> 00:08:31,680 Speaker 2: good place to be registered. It's a good environment to 159 00:08:31,720 --> 00:08:37,160 Speaker 2: operate a global bank, with a good regulatory environment, and 160 00:08:37,440 --> 00:08:38,480 Speaker 2: we're very happy there. 161 00:08:38,559 --> 00:08:42,520 Speaker 1: So when you look at UK mortgages, I think you 162 00:08:42,520 --> 00:08:45,160 Speaker 1: were the first major bank to actually start cutting your 163 00:08:45,200 --> 00:08:48,439 Speaker 1: rates last week. Do you see rates substantially filing from 164 00:08:48,480 --> 00:08:50,360 Speaker 1: mortgages in the near future. 165 00:08:52,000 --> 00:08:53,760 Speaker 2: I think it's going to be a function frankly, the 166 00:08:53,800 --> 00:08:55,960 Speaker 2: swap rates in the UK. You know, it's not just 167 00:08:56,000 --> 00:08:58,120 Speaker 2: the base rates in the UK, but it's the swap rates, 168 00:08:58,160 --> 00:09:00,959 Speaker 2: because most mortgages are priced off swaps, And it will 169 00:09:00,960 --> 00:09:03,240 Speaker 2: be therefore a function of what is the market confidence 170 00:09:03,280 --> 00:09:06,320 Speaker 2: Where does the market see the yield curve? And we 171 00:09:06,320 --> 00:09:09,040 Speaker 2: saw the yel curve go up, then we started to 172 00:09:09,040 --> 00:09:11,840 Speaker 2: see it come down. Our ambition is to try and 173 00:09:11,880 --> 00:09:16,600 Speaker 2: make sure our rates are as reasonable as possible to 174 00:09:16,720 --> 00:09:20,720 Speaker 2: help customers navigate what is definitely a challenging environment of 175 00:09:20,880 --> 00:09:25,400 Speaker 2: higher rates in the market plus higher inflation. So if 176 00:09:25,400 --> 00:09:28,000 Speaker 2: we can move down, we will do as quickly as possible. 177 00:09:29,160 --> 00:09:32,160 Speaker 2: So that was our decision. It will it will. I 178 00:09:32,200 --> 00:09:35,480 Speaker 2: can't predict what the yel curve necessarily will do. There 179 00:09:35,520 --> 00:09:38,520 Speaker 2: is the prospect of more interest rate rises in the 180 00:09:38,559 --> 00:09:41,760 Speaker 2: future in order to combat the inflation, and that therefore 181 00:09:41,800 --> 00:09:44,640 Speaker 2: could change the yield curve for the swap rates, and 182 00:09:44,720 --> 00:09:47,200 Speaker 2: therefore we may have to adjust price in then pop 183 00:09:47,240 --> 00:09:47,800 Speaker 2: all down. 184 00:09:48,920 --> 00:09:51,400 Speaker 1: But do you see a correction in the UK property 185 00:09:51,480 --> 00:09:53,440 Speaker 1: prices going forward? Significant correction? 186 00:09:55,520 --> 00:09:58,080 Speaker 2: I mean the UK property market has been extremely resilient. 187 00:09:58,600 --> 00:10:01,000 Speaker 2: The mortgage market in the UK, and I'll broaden that 188 00:10:01,080 --> 00:10:04,240 Speaker 2: out so generally the business community in the UK, despite 189 00:10:04,320 --> 00:10:08,319 Speaker 2: challenging conditions, they've been extremely resilient. Our mortgage book is 190 00:10:08,360 --> 00:10:12,520 Speaker 2: holding up extremely well. Our corporate lending book is holding 191 00:10:12,600 --> 00:10:16,440 Speaker 2: up extremely well. There are challenges, there are pressures starting 192 00:10:16,480 --> 00:10:21,280 Speaker 2: to be evident, but they're relatively manageable. From a UK 193 00:10:21,360 --> 00:10:23,360 Speaker 2: economy point of view and a bank point of view, 194 00:10:25,280 --> 00:10:29,079 Speaker 2: but higher interest rates for longer will continue to pressure 195 00:10:29,200 --> 00:10:33,320 Speaker 2: both consumers and businesses and it's in all our interests 196 00:10:33,360 --> 00:10:36,680 Speaker 2: that we can get inflation down as soon as possible 197 00:10:37,040 --> 00:10:39,120 Speaker 2: in order to ease the pressure on the YU curve 198 00:10:39,160 --> 00:10:39,680 Speaker 2: and rates. 199 00:10:42,040 --> 00:10:44,040 Speaker 1: No, it's clear that in the last couple of weeks 200 00:10:44,120 --> 00:10:46,440 Speaker 1: Nigel Faras really dominated the headlines when it came to 201 00:10:46,480 --> 00:10:48,400 Speaker 1: banking in the UK. Do you think it will change 202 00:10:48,960 --> 00:10:51,360 Speaker 1: banking in this country and would you ever drop a 203 00:10:51,400 --> 00:10:53,560 Speaker 1: customer because of their political beliefs? 204 00:10:55,200 --> 00:10:58,520 Speaker 2: Well, first, our policy is very clear. We do not 205 00:10:59,080 --> 00:11:01,800 Speaker 2: exit a client or d banker client based on their 206 00:11:02,320 --> 00:11:05,080 Speaker 2: lawful personal views. We don't do that as part of 207 00:11:05,120 --> 00:11:09,440 Speaker 2: our policy. What I also want to do is say 208 00:11:09,520 --> 00:11:12,400 Speaker 2: we will work with the authorities in the UK, the 209 00:11:12,440 --> 00:11:16,199 Speaker 2: FCA and the regulators in the UK in whatever work 210 00:11:16,240 --> 00:11:18,280 Speaker 2: they're going to do over the next few weeks to 211 00:11:18,360 --> 00:11:21,880 Speaker 2: try and find a good resolution to the current situation 212 00:11:21,960 --> 00:11:25,600 Speaker 2: that exists. But our policy is we do not dbank 213 00:11:25,760 --> 00:11:29,599 Speaker 2: based on the lawful personal views of our customers. 214 00:11:31,280 --> 00:11:33,520 Speaker 1: Nol quinn As always, thank you so much for a 215 00:11:33,559 --> 00:11:36,600 Speaker 1: part of your time. That was the HSBC Chief executive 216 00:11:36,760 --> 00:11:39,320 Speaker 1: nol Quinn after a strong set of results,