HSBC’s decision to pivot toward Asia at the exact moment that China stumbles is worrying shareholders. They should be more sanguine.

Back in June, the bank said it would eliminate $290 billion of risk-weighted assets, almost a quarter of its total, and redeploy 40 percent of remaining assets to Asia, where it expects returns will be higher.

Then China’s stock market slumped and growth in the world’s second-biggest economy fell to the slowest pace in more than five years.

HSBC shares are down almost 23 percent from their April high. The bank now trades for 10 percent less than its tangible book value, while its purely U.K.-focused competitor Lloyds is at almost 10 percent more.

Yet the reasoning behind its punishment by the markets wasn’t borne out by HSBC’s third-quarter earnings on Monday.

Yes, revenue fell as the stock market rout cut demand for life insurance products in Hong Kong. But there were two promising signs: first HSBC appears to be able to lend money to people with a good chance of paying it back. This is a simple premise in banking, but often forgotten -- as HSBC rival Standard Chartered is finding out. Chief executive Stuart Gulliver said today there was no visible impact on HSBC’s Asian credit quality in the third quarter.

Second, he also promised to return capital to shareholders if he isn’t able to redeploy it. That not only looks prudent, but may even allow the bank to increase dividends to shareholders, Citigroup analysts have pointed out. HSBC already yields 6.4 percent, more than either Barclays or Lloyds.

Gulliver’s gamble is that Chinese growth will continue to outpace Europe and the U.S., and that there will be more demand for consumer and commercial banking services as the region’s population expands. HSBC estimates that by 2025, almost half the revenue in global banking will come from China and the rest of Asia, compared with 30 percent today. That implies 12 percent compound annual growth in Asia, compared with 6 percent in the U.S. and 4 percent in Europe.

To a large extent, the shift has already happened for HSBC. Asia accounted for 64 percent of adjusted pretax profit in 2014, up from a third in 2004. Europe and the U.S. both shrank.

This is not a decision made in haste, more a measured recognition that the world’s economic center of gravity has shifted. Gulliver should complete that process and move the bank’s headquarters to Hong Kong from London.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Edward Evans inLondon at eevans3@bloomberg.net

To contact the editor responsible for this story:
James Boxell at jboxell@bloomberg.net