HSBC enters the mortgage market

Martin Tricaud, managing director of HSBC Australia, says the bank is not afraid to offer competitive prices. Louie Douvis

This compares to AMP Bank’s market share of 0.8%, but lower than ING’s (2.93%).

In the year ended Dec. 31, HSBC’s Australian division posted pre-tax profit of $463 million ($620.4 million), representing double-digit growth on the year previous.

Over the past two years, the bank has opened seven additional branches, mostly in suburban Sydney and Melbourne, and now has 38 branches in Australia. This year it plans to open two branches in Claremont, a suburb of Perth, and in Barangaroo in Sydney’s CBD.

Mr Tricaud said customers were visiting branches less often, but still preferred to see a banker in person for home loans.

More visibility

“They could almost completely avoid going to a branch, even for the account opening process or mortgage applications. But we still see a number of customers who prefer to go to a branch, especially for mortgages. So there is still a certain relevance [of branches],” he said.

“We want HSBC in Australia to become a bit more of a household name, to have a bit more visibility in the market.”

The move comes as the big four banks attempt to cut costs by closing branches and cutting staff.

HSBC’s approach contrasts with digital-only bank ING, which has managed to become Australia’s fifth-largest bank for retail mortgages and savings despite having only one ‘branch’ , under the ING Lounge brand, in Sydney CBD.

Meanwhile, since 2016 rival Citi has closed more than half of its branches in Australia to just four, but is instead opening wealth centers to offer face-to-face advice to sophisticated investors.

Globally oriented products

HSBC also started working with mortgage brokers 18 months ago. Prior to this, the bank only sold mortgages directly to customers, allowing it to reach at best 45% of potential customers.

“[Mortgage broking] acts in favor of competition. It gives customers simplicity and ease of comparing propositions, and we benefit from that because we have a very strong proposition,” he said.

At the same time, HSBC is trying to tap into more Millennial and professional customers by increasing its globally oriented products, such as a multi-currency account paired with a single debit card.

Speaking to the Hayne Royal Commission, Mr Tricaud said it was an “exciting time” for Australia’s banking industry. “We weren’t called to the hearing, but in the past we’ve had our share of problems,” he said.

HSBC admitted to the Hayne Royal Commission a series of serious wrongdoings over the past few years, including improper advice to customers, which led HSBC to enter into a three-year binding undertaking with the business regulator.

He also admitted running potentially misleading advertisements about home loans and credit cards and failing to report certain cash transactions to AUSTRAC as required by anti-money laundering laws.

“I found the royal commission’s report to be very wise, balanced and a very strong basis for the industry to move forward,” Tricaud said.

Priscilla C. Carnegie