LONDON—HSBC, Europe’s largest bank by market value, may defer into next year a decision on whether to move its headquarters out of London, with management conceding Monday they might need more time to assess whether relocating to Asia would make sense in the long term.
The bank has been steadily shifting its center of gravity toward the fast-growing Asian economies — on Monday it announced a new joint venture in China’s booming Pearl River Delta region. But Chairman Douglas Flint stressed no decision has been made on whether to return HSBC’s domicile to the region where it began 150 years ago.
“We’re part way through and if we need to take longer we will,” Flint told reporters on a conference call.
After being hit by a series of regulatory crackdowns and fines in Europe and the U.S., the bank is carrying out a sweeping reorganization to shift focus to Asia, where it expects a rapidly growing class of newly wealthy people to drive profit. The region accounted for about two thirds of the bank’s profit for the first nine months of 2015, even though it’s home to only a third of its staff.
Pre-tax profit jumped by a third in the latest quarter as it paid out less in fines, settlements and British customer compensation ordered by regulators.
The bank posted $6.1 billion in profit for the July-September period, up 32 percent from a year earlier. Revenue slipped 4 percent to $15.1 billion.
CEO Stuart Gulliver said a stock market drop over the summer in Asia, sparked by a sell-off in China, weighed on revenue.
“Our third-quarter performance was resilient against a tough market backdrop,” Gulliver said in a statement
Operating expenses, which include fines and other regulatory expenses, fell by $2.1 billion, or about a fifth, from a year earlier to $9 billion for the quarter.
Though it has not yet decided whether to move its headquarters, the bank is clear on where it thinks its commercial future lies — China and the Asia-Pacific region. At the same time, HSBC has warned about the economic risks facing Britain if the country opts to leave the European Union in a referendum that is due by the end of 2017.
It’s also complained about the cost of a levy that the British government puts on banks — HSBC is set to pay around $1.5 billion this year alone on that. Gary Greenwood, a banking expert at Shore Capital, suggested that proposed changes to the levy and other regulations have removed some of the pressure for the bank to move.
