HSBC Hong Kong said it planned to improve net interest income by expanding in high-margin sectors, including credit card and insurance services, since it was likely its mortgage business would continue to face intense competition due to low interest rates.
'You have to look at mortgages in a different way,' said Peter Wong Tung-shun, HSBC's Asia-Pacific chief executive. 'What we need to do is not only look at the profitability of a mortgage loan book, but rather at what other products we can cross sell to the customers.'
The bank's net interest income in Hong Kong was generally flat last year compared with 2009. It increased 1.2 per cent to US$ 4.24 billion. The lender's Hong Kong operation saw a rise in lending volume, but it was offset by low margins due to competitive pressure and low interest-rate environments.
Wong said mortgage loans attracted the highest amount of cross-sells and the bank would continue its strategy of cross selling products such as insurance and credit card services to customers to increase margins.
Louis Wong Wai-kit, director of Phillip Capital Management, said he believed competition in the mortgage market would be even more intense this year and that expanding the bank's loan volume in Hong Kong would be a major challenge.
Business on the mainland, excluding profits from associates such as Ping An Insurance and Bank of Communications, jumped by 92 per cent to US$215 million.