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HSBC joins mortgage war with 3.6pc loan
The Australian 12:00am September 1, 2017
Glenda Korporaal
HSBC is planning to step up its Australian business with a more aggressive push into mortgages and plans to open new branches and expand its role in agribusiness and infrastructure.
The bank will today launch an aggressively priced mortgage rate of 3.65 per cent for owner-occupied housing that will be available for customers who sign up for home loans between now and the end of the year.
This follows a deal it struck recently to sell its mortgages through home loan brokerage Aussie Home Loans.
It also plans to raise its profile in Australia with another 16 new branches over the next 18 months, mainly in NSW and Victoria, to boost its existing 31 existing shopfronts.
“We have ambitious plans for HSBC in Australia,” chief executive Martin Tricaud said in an interview with The Australian this week. “It’s a competitive, very well regulated market where we believe we can bring a bit of competitive tension.”
The French-born Mr Tricaud, who arrived in Australia in April after a four-year stint running HSBC’s business in South Korea, rejects suggestions the bank is taking advantage of tighter prudential and regulatory controls that will limit the growth of the big four Australian banks.
But he has arrived in Australia with plans to make the bank, which has hitherto been seen as having a focus on Asian retail and wholesale customers, trade finance, corporate advisory and high-net-worth expats, more of a player in the domestic banking market.
“We see Australia as a very promising market for HSBC,” he said. “It is a country with a lot of potential. There are two major reasons — demographics and international connectivity and trade.
“Australia’s demographics have been growing nicely with a combination of local population growth and immigration.”
Much of the immigration growth has come from Asia where HSBC already has a strong presence. “We believe this is something that we can build on in Australia,” he said.
Australia’s high level of trade, particularly with Asia, also made the market more attractive for the bank that billed itself, until last year, as “the world’s local bank”.
The group dropped the branding last year as it cut back its operations in many smaller and emerging markets, including the sale of its operations in Brazil.
But it still has operations in more than 70 countries with a strong presence in Asia, and has clearly set its sights on the Australian market as a potential growth opportunity.
“Some 25-30 per cent of Australia’s exports go to China,” Mr Tricaud said. “We want to be present in this trade and investment corridor between Australia and China and Australia and the ASEAN countries.”
Mr Tricaud said HSBC had also been attracted by the relatively high level of returns in the Australian banking market.
“The Australian banking market is a very attractive market where the industry is quite profitable,” he said. “When you look at the level of returns in the Australian banking market, it is very much comparable with other Asian countries.
“But the big difference is that it is a high level of return within an OECD country.
“It is very consistent in terms of the level of returns with other Asian countries, but with the level of regulation and prudential standards of an OECD country. It has the best of both worlds.”
HSBC struck a deal with Aussie Home Loans in April to sell its mortgages through the broker. This represents a return to the mortgage broking business by HSBC after 10 years staying out of the broking market in Australia.
Mr Tricaud said this could be the beginning of other deals with mortgage brokers, which are now responsible for some 50 per cent of home loan generation.
“We have started with Aussie Home Loans two months ago and we are very encouraged with the way it is going,” he said. Mr Tricaud said deals with other mortgage brokers were “on the agenda”.
He said the new low-interest home loan rate would be offered to people who signed up with HSBC mortgages between now and the end of the year.
“We are a small player in the market in Australia with a market share of only 1.5 per cent,” Mr Tricaud said.
“We wish to grow without compromising in any manner our credit criteria, which is why we are positioning this offer only for owner-occupiers.
“We have the capital and liquidity to deploy in the local market. We are launching the new mortgage campaign from September 1 with a very attractive rate to grow our share of the market.”
Mr Tricaud said HSBC, which now has 31 branches in Australia, was planning to open another four new branches in Australia by the end of the year and 16 new branches over the next two years.
“We want to make the HSBC name more of a household name in the banking landscape in Australia,” he said.
“We need to increase the visibility of our brand and provide more accessibility to our customers.”
Mr Tricaud said HSBC had a strong position in the trade finance area business in Australia and in other wholesale areas such as custody.
“We want to be more engaged in agribusiness and working with local companies to assist them in their international expansion plans,” he said.
HSBC was also keen to expand its involvement in Australian infrastructure lending.
“HSBC is a very large player globally in infrastructure,” Mr Tricaud said.
“We are very excited at the plans we see from the federal government and a number of states including NSW and Victoria.”
Mr Tricaud said HSBC saw big opportunities for lending globally as a result of the Chinese government’s Belt and Road initiative.
“We see this as a critical infrastructure opportunity for HSBC and we believe that Australia and Australia companies have a part to play in this initiative,” he said.
“There will be opportunities for Australian companies to be more involved in some of these initiatives in the ASEAN area and we are very much willing to help them.”
Mr Tricaud said he was not worried about the prospect of royal commission into the financial sector if Labor won government in the next election.
“We take the regulatory environment as it is,” he said.
“We want to comply with the law everywhere we operate and be a good corporate citizen.
“We are focused on our customers and we want to grow our market share in Australia.”