The chief executive of HSBC today reiterated the banking giant’s goal to capture an additional $1 billion in revenues in the short and medium term, above the $1 billion targeted a year ago, as it sees strong growth for referrals and cross-selling.

Stuart Gulliver, speaking at the bank’s annual general meeting in London, listed as one of HSBC’s priorities the goal of restructuring the private banking business, “focusing our offer on diversification and investment opportunities in fast-growing markets.”

Like many of its peers, HSBC has been contending with the conflicting pressures of rising client demands, tougher regulations and bank capital standards, as well as uncertain markets in the West and stronger economic growth in the East.

Managers will continue to “simplify” HSBC, leaving markets “where our presence doesn’t make strategic sense,” Gulliver said.

“We will continue to run off legacy assets, including our North American consumer and mortgage lending book,” Gulliver said.

“On standards, we believe in doing the right thing for its own sake; but when the costs of failing to live up to our values can include regulatory fines, compensation, and lasting damage to our brand and reputation, it is also vital for protecting the value of your investment,” Gulliver continued.

Cost savings

Earlier this month, the Hong Kong/London-listed banking giant said it has achieved $2 billion in cost savings on an annualized basis. HSBC has made substantial cutbacks in Asia, including 3,000 job losses in Hong Kong and the sale of its Japanese, South Korean and Thai retail businesses, and they are taking effect. The overhaul helped profit before tax increase 15 per cent in Hong Kong and the rest of Asia-Pacific during 2011.

Altogether, HSBC has disposed of or exited 28 non-core businesses since the beginning of 2011, potentially releasing $55 billion in risk-weighted assets.

As recently reported, the banking giant has agreed to sell businesses in Colombia, Peru, Uruguay and Paraguay, entering a deal with the Colombian banking entity controlled by the Gilinski Group, Banco GNB Sudameris. HSBC has also said it may sell its wealth and retail banking operations in Korea to the Korea Development Bank, part of the KDB Financial Group.

On 8 May, HSBC reported that first quarter pre-tax profit for its global private banking segment in the first quarter of 2012 fell by $22 million year-on-year to $286 million, hit by weaker revenues and higher loan impairment charges, partly offset by lower operating costs. In its North America segment, the private bank reported a profit of $23 million, down from $32 million a year ago but up sharply from $7 million in the previous quarter.