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00:00What's not to love about these numbers at the top line profit doubling loan growth guidance is good credit losses ACL your guiding materially lower E C out for the year. Let's start with the dividend because that's what everybody is going to focus on. In the first instance you say you could hit a 40 to 55 percent payout. You and I by the end of this year. Is that the top of the ambitions. And how confident are you that you can hit that dividend policy by the end of the year. Look we're very very confident we can hit that dividend policy this year. I mean I think what we've seen so far this year is capital to continue to accrete much into a much better place and where we thought we'd be at this point yet largely driven by credit outperforming relative to where we thought. But relative to three to six months ago our capital position is a lot stronger. So we are adjusting our tonality today on capital distributions. We are signaling the fact that relative to the start of the year we would have said to you that we were going to continue to be cautious. I think now we definitely feel more confident and we will keep buybacks under review in the coming quarters together with dividends. OK. So were you say you've seen long growth and strong growth in all regions. Whereas the top of that agenda. How strong was your long growth in the business. Let's say start in China. Well overall I think we've seen the housing markets globally continue to be strong. So for us the biggest job markets Hong Kong the U.K. another good three months of mortgage growth. We're beginning to see a return on the retail side on credit card spending that we think will return and into higher credit card balances in the coming months. Trade for us has continued to be strong. Had another good quarter. And beyond that we're starting to see a much broader based recovery in commercial lending. So this is the first quarter I think we've seen since the onset of covered where we can genuinely see decent loan growth coming back. OK. You help me square this way. That's a very bullish call. The IMF warned of a dangerous divergence. They say emerging Asia is where they've given their biggest downgrade. You and so you've given me very very bullish outlook are in part driven by by by Asia. Can you square those two together. The IMF is such a downbeat outlook and yet you're giving me a relatively upbeat outlook. Yeah I mean I think it depends which market you're looking at at the moment. I think here in the UK. Yeah. Growth this year is expected to be around 6 percent. Similarly we're expecting to see good growth in Hong Kong and China. I think other parts of Asia at the moment where the Delta variant is beginning to have a more material impact. We are seeing a slowdown and some economic growth. But for us biggest lending markets Hong Kong and the UK. Just how big a boost in lending have we seen in the UK then we've seen a huge bounce back. Just contextualize that for us. Is that commercial or is that private or mortgage. Definitely mortgage. We've seen some recovery emerging now and commercial and credit card spending is on the rise in the UK but more which is continues to be extremely strong here. Yeah largely driven I think by a combination of low interest rates and you know the rebalancing of working from home and a hybrid working. Let's focus a bit more on China. Trillion dollars was wiped off Chinese equities globally from Hong Kong to onshore to the United States. Are you unscathed. Do you have any margin calls any collateral impaired as a result of the wipe out. No not at all. I mean I think credit position we've always been relatively conservatively positioned. We've had no impact at all. If anything conditions in Hong Kong continue to improve. The business has had another good quarter and we're seeing good IPO activity with some of the return of IPO is out of the US and to the Hong Kong market. Well that's where potentially you and I want to get your guidance because of course U.S. China tensions are rising. That's very evident. And the Chinese authorities reaching in to regulate capital raisings. Are you bullish on you on your pipeline for IPO and capital raisings or should we be a little bit more measured when you see such heightened regulation. Yeah I think there is some reason to be cautious but we do think the activity levels in Hong Kong will continue to benefit from some of the tensions we're seeing at the moment between China and the US. As a result of the market dislocations you manage risk you manage flow. Your job is to manage the risk book. Are you preparing to pare back any landing to any sectors to tech to education to hiring at all as a result of the moves. We always keep risk appetite under constant review. I think at the moment we're in it. We're very comfortable with credit books in China. And I think when you look at our lending books in China less than 40 percent of our loan books are to state owned enterprises. About 20 percent of the book is to international companies investing into China and 40 percent of the book is to private enterprises in China. So we think we're reasonably balanced and we're comfortable with our risk. As on a daily basis the team here cover the political the social and the governmental shifts in the same way as yourself and the management team. Do we risk seeing anti sanctions law. Government have the potential to seize assets and deny visas. When you see the risk of this legislation are you and Noel still are 100 percent committed to Hong Kong and China are 100 percent comfortable with the exposure as these sands shift some would say putting you in a very difficult position. We've been operating in Hong Kong for over a hundred and fifty six years now it is our home market. We make about 40 percent of our profits in Hong Kong. It's absolutely critical to our business. As you know we're in the middle of shifting senior executives. Three of our four global business CEOs are moving down to Hong Kong. We're investing heavily in the market and investing heavily in China and the rest of the region. We're very confident about the long term macro growth trends in Hong Kong and mainland China and the rest of Asia. So that's your comfort level. What about the flow of capital. Have you seen any less comfort perhaps with the clients in terms of flow of capital out of Hong Kong. Not at all. I mean I think you can see in today's results that business in Hong Kong continues to grow. Well flows in Hong Kong continue to be very active and growing. So no impact at all. And in terms of the markets you're obviously you talk about global markets that's where we started. Where are you perhaps most concerned by. You see a relief in the U.K. You're stoic about China. Is there anywhere that you're concerned about. Well just generally we continue to be cautious about you know the impact of the Delta variant. I think that will slow global growth somewhat. From what people's expectations are at the moment and obviously we're alive to new variants emerging but we do think fundamentally we're into a period of recovery. We do think that recovery will be bumpy around the world. But fundamentally I think good growth in the second half and a much more substantive growth in 2022 as more of the world gets vaccinated. And with that it's going to be about building the wealth management business. Knight You had big plans to hire big build big in China. You promises an update at the halfway mark and is that going to scale. I know that you've got overall downsizing of numbers but in wealth. Give me a sense of the velocity of scaling up. Yeah it's early days now but we've hired we're now operating. We've got a new life insurance vehicle called Pinnacle that we've launched. It's now up and running in five cities in China. We've hired about three or four hundred mean wealth advisors en route over the next few years to hire 5000. So very much on track. And you know generally wealth for us across Asia we see as a massive scope secular opportunity for us. Are you having to pay more. I mean this is this is the great debate our CFO and CEOs all the time. It looks like pay is rising in wealth to either bring in the assets under management or retain. Are you having to pay marginally more. Quite a bit more. Just put some scale Orion the salaries and remuneration you're having to pay in wealth. Look I mean I think generally we are seeing some pay pressure. Globally it's not just in wealth but we're also seeing it for example in global markets and global banking activities in selected countries around the world. We have put more crude more into the variable people this year. But having said that we're still committing to our cost targets this year because I think the ramp up and some spend like travel premises etc. is likely to be slower than what we thought because of a slower recovery out of it than we may have anticipated six months ago. So overall what we are seeing some pay pressures. I think overall our costs continue to be in line with what we expected. Given this set of numbers that you've just delivered to the market the upbeat dividend the upbeat provisions of the conversation you and I have just had can you and the team know reaccelerate the restructuring plans that that you have maybe go a bit faster. Well I think we're better as fast as we feel we can at the moment I mean in the last few months we've announced the sale of mass market retail business in the US. We've announced the exit of our French retail banking business. We're in the process of moving a bunch of staff senior staff down to Hong Kong. Our investment program is running at about as fast as it can for the capacity that we've got to execute at the moment. So we're on track. We're running as fast as we can.

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HSBC CFO: Very Confident We Can Hit Dividend Policy This Year

Ewen Stevenson, HSBC CFO, discusses the bank's 2Q21 and 1H results, IPO activity in Hong Kong and his global economic outlook. He speaks with Manus Cranny on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)

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