HSBC battles entrenched locals in US credit card push

HSBC has just 0.1 per cent of the credit card market in the US.

london - It is also battling the legacy of a previous disastrous foray into US lending

Published: Fri 15 Jun 2018, 8:15 PM

Last updated: Fri 15 Jun 2018, 10:17 PM

HSBC's push into credit cards and personal loans in the United States will be no easy task as the bank faces entrenched domestic rivals and the legacy of a previous disastrous foray into US lending.

The move by HSBC to embrace a riskier but more lucrative slice of the US market, that it has largely shunned in recent years, is part of its broader strategy to improve profitability - eyeing a global return on equity of 11 per cent by 2020.

The bank's US return on tangible equity, a key measure of profitability, is just 0.9 per cent.

HSBC has just 0.1 per cent of the credit card market in the US, according to data from RFi Group provided to Reuters, compared with 16 per cent and 15 per cent for market leaders Bank of America and JPMorgan.

HSBC's plan is to sign up more of its existing customers for credit, as well as enticing new ones with cards that offer low fees or attractive cashback rates, according to Marcos Meneguzzi, head of cards and unsecured lending for HSBC in the US.

Europe's biggest bank will also be trying to sign up US customers who are likely to have multiple cards already.

"It's a good time to be in the US card market, notwithstanding the competition is fierce," said David Robertson, publisher of the influential Nilson report on the US credit card market, citing low default levels and the growing economy.

"The question is whether you can convince your customer who already has a Capital One Card, and an America Express card and likely a couple of others, that they need yet one more." - Reuters