HSBC of today lacking in vision that had helped it grow
The banking giant is searching for ways to achieve earnings per share growth, but using the lean and mean strategy may be difficult
"In May 2013, we set out our plans for the next phase of delivering our strategy, covering the period from 2014 to 2016. Our strategic direction is unchanged and our priorities are clear."
HSBC group chief executive
SCMP, August 6
Back in the days when I worked as an investment analyst, this was the sort of statement I liked to hear at earnings results time from the companies I was covering.
It made life easy by offering plenty of opportunity to discuss how performance did or did not match the strategic direction targets, especially when these were given names - Growth Opportunities Through Human Resource Management, that sort of thing.
Waffle, waffle, waffle, I would have four pages of it between the share price chart up front and the half-page disclaimer on the back, all written up before London opened and it was time to get on the phone again - We maintain our "buy on weakness" (translation: Sell) recommendation on this stock.
But that's not the way I look at HSBC now.
I could look at things as a customer of the bank does, sometimes pleased with the efficiency of its services, but displeased with the fees. Or, as yesterday, annoyed that I couldn't use my ATM card at an HSBC branch in Macau because Macau is now treated as abroad and I had not informed the bank I would be going there.
Let it pass. It was mostly the Hong Kong Monetary Authority's fault anyway.
Then again, I might decide to become morally high-minded. I could preach the evils of selling little old ladies "investment products" that they don't understand, or become thunderous about money-laundering offences that US authorities accused HSBC of committing.
But I won't. I also think HSBC is beginning to discover that laying off the risk of the derivatives book on retail customers can come back to bite you. I say beginning . I'm not sure they are quite there yet.
No, what I have in mind is the bank of earlier days, when population growth was soaring with economic migrants from Guangdong and the only hope for the economy was a labour-hungry garments industry founded by wealthier migrants from Shanghai.
What the combination needed was financial help, both in setting up the factories and arranging exports. It needed a bank with faith in its customers and the vision to make it all work. It got that bank.
I have in mind the bank of the days of Michael Sandberg and William Purves, both of whom made mistakes, some real howlers among them, but who generally got the big calls right and were people whom all the rest of staff looked up to as Boss. In those days, you bought that stock and just locked it away.
And now? I just don't see it anymore. Somewhere 10 or 15 years ago, the bank became a big moo cow, wandering around the pasture in search of greener grass but not knowing quite where to look, absorbed in earnings per share growth that became ever more difficult.
Mr Gulliver, of course, may say he has recognised the problem and adopted the solution of the mean and lean approach during his leadership of the past 2½ years. This is all very well but lean cows are not necessarily healthier than fat ones. If it's still a cow, starving it won't help.
I am all in favour of earnings per share growth. I look for it in my investments. And cost control is obviously a good way of achieving it. But the firms that consistently achieve it tend to be those of vision. I saw that in the old HSBC. I don't see it in the same way today.
What's needed is that vision thing that built this bank in the first place. It's about inspiring people all the way down to the most recently hired clerk with a sense of common purpose and achievement. It can happen again, but I don't think it's happening now.