With an improving housing sector, a rising employment rate, and more flexible monetary provisions, the banking sector has experienced some relief in 2013. Yet future topline growth will face some challenge due to lower interest margins and slow loan growth rates. Banks are countering this sluggishness with better expense control and more favorable lending for its customers. Let’s take a look at 3 banks and their plans to sustain growth.
HSBC Holdings plc (ADR) (NYSE:HBC) is the biggest hedge fund administrator in the Asia-Pacific region. It offers services like trade settlements and cash and securities lending to hedge funds. It’s also planning to double its prime brokerage business in the Asia-Pacific region. HSBC has seven out of the 10 biggest hedge fund managers in China under its prime brokerage unit, which helps it compete in a very large market.
HSBC Holdings plc (ADR) (NYSE:HBC) recently sold two-year notes for $81.7 million at 2.25% annually in Singapore, its first Yuan-dominated bond. HSBC is predicting that the Singapore debt market will reach $58 billion in 2013. It appears as though it just found a lucrative opportunity.
HSBC Holdings plc (ADR) (NYSE:HBC) has hit its yearly cost reduction target of $3.5 billion, which is one of the reasons for a profit of $8.1 billion in the first quarter of 2013. It also plans to save an additional $3 billion over the next three years. HSBC has slashed around 40,000 jobs and is planning to cut 30,000 more in 2013.
After Royal Dutch Shell plc (ADR) (NYSE:RDS.A), HSBC is the second largest dividend payer on the FTSE 100 market, having paid $4.4 billion in 2012. Further, it has divested more than 50 mediocre businesses since 2011. In February, HSBC Holdings plc (ADR) (NYSE:HBC) sold its stake in Shenzen Ping, a Chinese insurance company, for $7.4 billion, which generated a profit of $2.6 billion. Its also planning to sell its unit in Panama for $2.1 billion in 2013. The profit from these divestitures is estimated to help HSBC with any future capital needs.
Going global again
Deutsche Bank AG (USA) (NYSE:DB) will be positively impacted by the implementation of the Liikanen proposal in Europe, which dominates the global banking system. The proposal will divide commercial banking from investment banking, where both will function as separate entities. It will help Deutsche Bank, which owns a dominant position in the European market, to generate extra revenue of $1.3 billion per year starting in 2012.