HSBC CEO Georges Elhedery discusses US dollar's continued dominance and growth opportunities in India

Time of India

16-05-2025

The world's reserve
money
and the primary
currency
for cross-border trade
payments
, the US
dollar
, wouldn't lose its lustre through the remainder of his banking career,
HSBC Group
chief executive
Georges Elhedery
tells Saloni Shukla and Sangita Mehta, arguing that predictions of its diminished role in
global business
might be rather premature. This exclusive interaction with the head of Britain's largest bank by market value discussed subjects as diverse as the lender's somewhat contra bets on Indian retail banking, the outcome of new trade pacts in a tariff-torn world, and the likely future winners in an investment universe that's literally adding a new asset class every trading week. Edited excerpts:
Two important trade deals that have recently happened, one between UK and India and the other between US and the UK. Could you take us through how, broadly, these two deals influence your business?
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Well, essentially these two deals influence the business of our customers, and therefore, by serving them it influences our business. So what matters for us most is what kind of opportunities they can explore due to the various opportunities that were created in these agreements.
And once we go through the phase of advice with our customers, we then support them with all our products and services.
HSBC has just become the UK's most valuable company. Could you describe what are the tailwinds that might have helped your company at this juncture to get there?
Look, so without specifically commenting on share price, I am pleased that the share price is recognising the performance of the bank. The first one is we've been demonstrating momentum in our business. And the momentum starts with the bread-and-butter business we do for our clients, which is deposits, which is basically being the safeguarding of their wealth.
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Then obviously there are the transaction banking, the wealth and the lending financing capabilities we provide. We have demonstrated very strong momentum all the way in our Q1 results.
The second one is as a management team we have demonstrated that we're very disciplined in doing what we do. And our mandate is to serve our customers where we can be the most competitive and make the biggest difference in how we serve them.
And then the third element that has also helped us is the fact that we are confident in our ability to meet our targets to achieve mid-teens return on tangible equity for the years 2025, 2026 and 2027.
Given the redrawn trade priorities, which currency do you think will emerge as a competitor to the US dollar?
For the rest of my career, probably the rest of my life, there would be no competitor to the US dollar. As a global reserve currency, a global store of value, a global transaction currency, the dollar is today 80% of trade finance globally. The dollar is 60% of reserve managers' assets. The dollar is 50% of global payments. So there is no alternative to the dollar. The fact that there will be more of other currencies used in trade or in payments or for reserve management is real.
It's part of the diversification exercise, but none of which will be anywhere near, if you want, individually anywhere near the dollar. But collectively, yes, there will be more diversification. And they will take a little bit more space, but individually, I don't see a challenger to the US dollar for the rest of, certainly my career, possibly my life.
How do you look at the opportunity for HSBC India? And under your leadership, what will be your priority here for the bank?
India is uniquely positioned on this planet as a massive growth opportunity. Before the end of this decade, India will become the third-largest economy by GDP. This scale we are talking about has shifted materially over the last decade.
We serve most of the multinational businesses investing in India. We serve our Indian customers for all their needs domestically and also overseas.
All these corridors are growing and in many cases, they're growing at double-digit percentage. So our baseline is growing with our customers. Over and above this baseline, we have the ambition to continue taking market share among international banks by continuously investing by putting more resources both in our corporate institution space and in our premier and wealth-personal banking space. Those investments should and must allow us to continue gaining market share.
I'm extremely optimistic about India. There is a stable economic outlook, there is a stable macroeconomic outlook, there is a stable geopolitical outlook, notwithstanding the horrible events of April 22, and all of this gives us a lot of confidence that our investment in India is well spent.
Most international banks operating in India have actually scaled back their operations, especially on the retail side. You are actually heading in the opposite direction. So what is it that you're seeing that your rivals might be missing?
First, we've been operating with 26 branches and now we have the approval to open 20 more branches.
Second, in the personal banking space specifically, we see a lot of opportunities where we can differentiate from local banks. Remember India is a scale market and local banks who in many cases are business partners with us will have the scale to compete in the wide retail business. So we need a differentiated proposition to be able to play to our strength. Our differentiated proposition tends to be around the affluent or the rising middle class in India because we can give them elements local competition could not give them inherently.
We give them international access. The rising middle class wants to send their kids to universities abroad, they want holiday homes abroad, they want to expatriate abroad and work in other jurisdictions. They want this multi-geographic service. We can offer that differentiator to the affluent growing middle class - what we call premier banking.
Given your optimism on India and focus on the affluent middle class, is HSBC currently considering any acquisitions in the wealth management space?
The short answer is of course any inorganic opportunity that can accelerate the build-out of our capabilities in our strategic areas, we'll consider. The hurdle for acquisition is quite high for us because what we want in an acquisition is to win scale, digital technology capabilities or product specific capabilities. We want the acquisition to be, for the shareholder, accretive. We do not want the acquisition integration to distract our own teams from growing organically because you don't want a trade-off integrating an inorganic acquisition at the cost of your organic growth opportunities.
Would you be putting more capital in India, given that India is one of the four growth priority markets that you've identified?
These markets will have a lot of the investment requirements, specifically in the premier and wealth space.
And they'll obviously have the investment requirements for corporate institutional banking, where we're already in the dominant position, but we need to keep improving our product and capabilities. And our customers' needs are growing. We need to be able to grow with them and faster than them because we need to pre-empt their future needs as well.
So those investments will definitely grow. That means investments in people. We already employ 45,000 people in India.
We put investment in branches and that's back to the 20 new branches, as well as the upgrading and uplifting of our existing branches. It's easy in India because you have the talent, skills and underlying infrastructure that's very technology friendly - starting with Aadhaar and everything on top. So we keep investing in technology.
But the capital generation of the entity has been fantastic and we're using that capital generation to carry on the growth.
So in the next five years, with all the investments that you plan to make, do you see revenues from India growing?
So as a geography, running two businesses, corporate institutional banking and then wealth and premier banking, India would rank in our top three, top four, very good, top three — a very important market. In terms of contribution to the group, we do expect India to well first, keep growing at the base rate of our customers growth rate, grow even further. but that's the opportunity in front of us. So the growth that we should be expecting has to be commensurate to the underlying economic growth, our customers' own growth and the fact that we're taking market share from our competitors.
So which is the asset class you think that smart money will chase five years from now?
Look, I think the value of a diversified portfolio across asset classes and geographies... But it doesn't answer your specific question, but it will answer how you best protect your wealth in the long term. Because there may be winners and losers over periods of time, but the best way, if you're managing a comprehensive portfolio, remains diversification of your assets. The asset class I would still be cautious about today, whether we can call it asset class is still debatable, but is anything related to crypto space. It's unregulated until it is regulated, until the regulation gives us sufficient comfort in the prudential rules behind them, the financial crime rules and KYC and what have you rules behind them, the systemic risks they pose, until all of that is addressed through a very comprehensive set of regulations. Like you'd regulate asset managers or mutual funds or banks, it will not be something we will operate in, and today we do not operate in this space.
Identify two opportunities and two risk factors for your bank in the next five years?
Well, since I'm here, Let's call India one opportunity. I want to call out wealth and transaction banking as great opportunities. if there's any fallout in the (tariff) negotiations that are taking place.
So for many countries July 9 is a very important day because our customers get more clarity on how they can transact internationally. Hopefully, that risk factor we can eliminate over the course of the next few months with better clarity and better fairness.
But we want them to still operate as a global trade with the right fairness considerations in mind. That's a risk factor. The other risk factor is cyber. And it's not something we bankers would think about morning and evening, but it's something we spend money on morning and evening. But through Gen AI, you have endless means for fraudsters to make our customers victims. And, that would be one of the kinds of core areas where we invest in to protect our customers.