In an interview with CNN International, Vincent Cheng, Asia Pacific Chairman of HSBC talks about the bank's earnings. Please find below the full transcript of the interview with CNN anchor Manisha Tank. Images are attached for your use. (Images are available here)
**All use of materials must credit CNN International. Full Transcript MANISHA TANK, CNN INTERNATIONAL ANCHOR: Back to Hong Kong where investors picked up the HSBC rally in early trade, which rolled over from London on Monday. That's when the bank posted higher-than-expected earnings, giving a lift to the banking sector. Well, joining me here on the set, Vincent Cheng, HSBC's chairman here in the Asia region. He is -- like I said, with me. Great to see a rally. I'm sure you were happy to see that. But how does it feel when the rally is, it seems, according to people we've spoken to, just because people were relieved it wasn't any worse? VINCENT CHENG, ASIA PACIFIC CHAIRMAN, HSBC: I think we produced ourselves very solid results, and the market likes it. And we have also achieved what we set out to do in the beginning of the year, which is to maintain very high capital ratio, good liquidity, contain our exposure in the United States. We've run down our exposure in the United States by about $9 billion. And if you look at the provisions in the first half in the U.S., it's actually lower than the second half of last year. Asia still performs well. The Hong Kong Shanghai Banking Corporation, of which I'm chairman, still has an ROE of about 22 percent. And despite the rise in loan impairment in Asia, it's from a very low base. And our overall loan impairment ratio is only 1 percent. So it's a good set of results given the very difficult environment we are in. TANK: But your profits are half, they're half. And I know that you're making money in global banking. You're making money in that area. But retail is getting absolutely hammered. What do you do about that? CHENG: Well, number one, you have to look at the results in greater details, because if we discount what we call fair value in our own debt, which is sitting at our accounting entry, our profit actually went down by about 25 percent instead of 50 percent. And also, as you said, the capital markets did well. And, yes, PFS, or personal financial services in the United States and Europe, haven't done as well. But our commercial banking, our business in Asia, Latin America, and Middle East has still done good. So we are not firing on all engines, but on the whole, I think given the difficult environment, the market expects that we have done a good job, particularly in terms of cost management. TANK: But unfortunately, in my world, they say that the no news is the good news. I'm sorry, we've got to talk about the bad news. What are we going to do about the future? What are we going to do about the fact that you still have people in the U.S. and you have people in the U.K. -- and the U.K. in particular where a huge amount of your profits come from, who are defaulting on their loans left, right and center? CHENG: Well, I would not argue that the European business is in a bit of difficultly because of the economic environment in Europe. The U.S. problem, as you can see, has become smaller, because our exposures are smaller, and also we have run down the -- and the loan impairment is also smaller. But on the other hand, if you look at Asia, yes, profit is down because of this particular phase of the economic cycle. But then you look at the economy in Asia, I think things are actually stabilizing or in some countries we still see very strong growth like in India, in China, and I can feel that. I can see that -- the economic momentum in Asia will continue. TANK: Right. CHENG: So there is good news here, but... TANK: OK. CHENG: not everywhere, of course. TANK: Well, no, as I keep coming back to. CHENG: Sure. TANK: But again, just finally, in talking about the future, where is the future? Is the credit crunch over? Are we clear of this now? CHENG: Not entirely, I would say. But the banking system around the world is much more solid. As you can see, the banks have better ratios, the results announced by the banks recently have shown that probably the worst is over, in my view. And if you look at our own balance sheet, we have very strong liquidity, and also very high capital ratio, which means that we can lend when loan demand returns. At the moment, unfortunately, loan demand around the world has been weakened. Trade is weak, but I expect things to...hopefully are a little bit better, depending, of course, on where the U.S. is going. But Asia itself is actually doing quite OK. TANK: You've clearly done that class on thinking positive. Vincent Chang, thank you very much. CHENG: Thank you. Thank you. -END- **All use of materials must credit CNN International. Issued by CNN International Press Office 4th August 2009 |
