Blog

Apr 20, 2023

HSBC, one of the largest banks in the world, has recently come under fire from one of its top investors, Ping An, a Chinese insurance company. In a letter to the bank's board, Ping An criticized HSBC's management for underperformance and a lack of strategic direction. Here, we take a closer look at the investor's criticisms and the bank's response.

According to Ping An, HSBC's stock has underperformed its peers and the broader market in recent years. From 2015 to 2020, HSBC's stock price fell by around 40%, while the MSCI World Banks Index rose by around 8%. Similarly, over the same period, HSBC's return on equity (ROE) was around 3%, compared to the MSCI World Banks Index's ROE of around 10%.

Furthermore, Ping An criticized HSBC's lack of a clear strategic direction, particularly in the areas of technology and innovation. The investor pointed out that while HSBC has made some progress in digitizing its operations and improving its customer experience, the bank still lags behind its peers in areas such as mobile banking and data analytics. Ping An also criticized HSBC's decision to scale back its presence in some emerging markets, such as Brazil and Turkey, while continuing to invest in others, such as Mexico and Saudi Arabia.

In response to Ping An's criticisms, HSBC acknowledged the challenges it faces but defended its overall strategy. The bank pointed out that it has made significant progress in improving its financial performance and customer experience in recent years, and that it is committed to investing in technology and innovation to stay competitive. HSBC also noted that its decision to scale back in some markets was part of a broader effort to focus on its core strengths and improve efficiency.

The exchange between HSBC and Ping An highlights the challenges facing large financial institutions in a rapidly changing global landscape. As competition from fintech startups and other non-traditional players continues to increase, banks must find ways to stay agile and innovative while also maintaining profitability and stability. HSBC's response to Ping An's criticisms suggests that the bank is aware of these challenges and is taking steps to address them, but it remains to be seen whether these efforts will be enough to satisfy investors and customers alike.