HSBC reported costs of $7.5 billion despite “continued cost discipline” in Q1 2023, which it attributed to “higher spend on technology” as it also revealed a $1.5 billion gain from its £1 Silicon Valley Bank acquisition.
The bank's IT leaders are continuing to execute HSBC's "Vision 27" for digital transformation and Group CIO Steve van Wyk recently illustrated the scale at which its infrastructure operates -- with its HSBCnet application handling 421 million payments worth over $14 trillion in 2022 alongside 140 million customer API calls.
The bank is now targeting 3% cost growth in FY23 versus a FY22 cost target base of $29.6 billion.
Despite $270 million higher technology spend Q1 costs were down on the previous quarter.
The figures came as the bank reported a 64% increase in revenues to $20.2 billion “driven by higher net interest income” – HSBC said that it expects to achieve net interest income of at least $34 billion in 2023.
Of its £1 Silicon Valley Bank UK acquisition, HSBC CEO Noel Quinn said: “We also saw an opportunity to invest in SVB UK to accelerate our growth plans. With the SVB UK acquisition, we have access to more of the entrepreneurs in the technology and life sciences sectors who will create the businesses of tomorrow.”
He later told Bloomberg Television that “I’m also setting up teams in other parts of the world that are the equivalents of SVB in the UK. So we bought a business in the UK, but I want to create that capability globally.”
In an earnings call this morning, HSBC highlighted its tech-focused strategy for growth and reduction of operating expenses, something that has seen it have to balance broad cost discipline with tech investment.
(In the last two years, the bank increased its technology spending by over $900 million.)
HSBC like its peers has long championed the role of technology in the future of financial services industry. This has underpinned the bank’s ‘digitization at scale’ strategy. While the Q1 2023 earnings report did not provide additional insight into the company’s push for cloud processing, HSBC remains in a multi-year deal with AWS as its strategic cloud provider but also works with multiple other cloud providers. The company’s last reported cloud adoption rate was at 27%, enhancing its automation, operational efficiency, and security across retail and commercial financial offerings.