BATTLING against sceptical Western investors, HSBC is on a mission to explain why its push into a slowing China is good for the global bank’s future growth.

    HSBC, which reported flat annual pre-tax profit in 2015, is betting that the Pearl River Delta region in southern China is succeeding in rapidly upgrading its economy from low-value manufacturing to high-growth industries, creating big opportunities to provide banking services.

    But overall negative sentiment toward China has meant its shares have dropped 26 percent over the past year.

    In the run-up to its annual shareholder meeting in London on Friday, HSBC took analysts and investors on a three-day tour of the Pearl River Delta, an area with 60 million people. It’s U.K.-based board went on a similar tour of the region last year.

    HSBC, which is the largest bank in Hong Kong and currently has 65 bank outlets in Guangdong Province, which includes the Pearl River Delta, is hoping to produce US$1 billion a year in pre-tax-profit from the area. But some investors are doubtful given the economic slowdown in China and a spike in Chinese bad bank debt.

    HSBC’s growth plan envisages adding 4,000 employees to the Pearl River Delta area over the next three-to-five years and it also plans to redeploy capital from other regions into Asia, though it is unclear how much of that will target southern China. It currently has around 1,500 bank employees and 13,000 IT and support staff in the Pearl River Delta.

    Citi analyst Andrew Coombs, who was on the trip, said HSBC is looking to grow its branch network in the region to 100 outlets, but HSBC will not comment on that.

    “The bank’s Pearl River Delta strategy is perfectly sensible,” said Ian Gordon, who heads bank research at Investec bank and was on the trip. “However, it will likely be three-plus years before we see any meaningful incremental contribution. It does nothing to soften the impact of near-term headwinds.”

    Last year, HSBC made 83.5 percent of its unadjusted pre-tax profits in Asia and 52 percent in Hong Kong alone. Its Chinese mainland banking profits, excluding associates, stood at US$1.05 billion.

    The Pearl River Delta, which has played a crucial role in China’s opening up to the world since the late 1970s, accounts for one quarter of the nation’s trade and has been known as the “workshop of the world” for its production and export of massive amounts of garments, electronics and other products.

    The region, particularly around the city of Shenzhen, is now turning into a hub for innovation and technology, as well as developing a services sector that includes law, design and accounting. Its US$1.1 trillion in annual gross domestic product is already bigger than Indonesia’s.

    During the road show, participants were introduced to local HSBC clients such as appliances maker Midea and telecom giant Huawei, according to the trip’s agenda. Other HSBC customers in the region include DJI, a Shenzhen-based manufacturer that supplies three quarters of the global market for commercial drones thanks to its Phantom model. (SD-Agencies)