HSBC CEO Gulliver Says Lower Bank Profitability Here to Stay
- Universal banks have ROE ceiling of about 10%, Gulliver says
- Finishing capital rules key to investor expectations, CEO says
HSBC CEO Gulliver: 10% ROE Is Probably New Goal
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Investors need to lower their expectations for bank profitability, as a 10 percent return on equity is probably as good as large universal lenders can do, according to the chief executive officer of Europe’s biggest bank.
"If you’re a universal bank, much less risky than before, with considerably less leverage,” 10 percent probably is the new goal, HSBC Holdings Plc CEO Stuart Gulliver said in a Bloomberg Television interview with John Micklethwait. With capital rules still in flux, he said banks have been struggling to answer shareholders’ question “how on earth can you get return of 12 to 13 percent? Well, you probably can’t.”