HSBC says bank may ‘materially’ raise staff pay in 2023 due to rising inflation

NEW YORK – HSBC Holdings chief financial officer Ewen Stevenson said rising inflation could force the bank to significantly raise salaries as its eyes “brutal” cuts in an attempt to keep a lid on costs.

“We are seeing pretty broad cost inflation,” Mr Stevenson said at a financial services conference hosted by Barclays Plc in New York. “Half of our cost base is fixed pay. We are thinking that we will have to materially step that up again in ’23 relative to ’22.”

Mr Stevenson said that on its current trajectory, HSBC would be about US$500 million short of its cost target next year.

While the bank aims to limit cost growth to no more than 2 per cent, he said it was facing a 6 per cent to 7 per cent rise in underlying costs.

“The only way to take that out, I think, is be pretty brutal internally on costs,” he said.

Chief executive officer Noel Quinn and Stevenson both “have a bias to focus on cost control over revenue growth,” he added. “A lot of it depends on the CEO’s commitment,” said Mr Stevenson. “He has been pretty clear internally that he intends to hit that 2 per cent cost target. So as long as he wakes up every day feeling that, I feel like I’m in a good place.” BLOOMBERG