49 (144) 2021


A two-speed recovery

Header dariusz kucharski

Dariusz Kucharski, CEO of HSBC in Poland, speaks to Michael Dembinski, chief advisor of the BPCC, about the challenges and opportunities facing the corporate banking sector in Poland in the wake of the pandemic.

How do you see banks’ investment and lending decisions affecting companies in Poland this year? How has the pandemic affected the business cycle?

The world is struggling with the pandemic and its impact on the real economy. It is also a challenge for the financial industry, even though not all businesses have been equally challenged by Covid-19.

The pandemic has dampened business optimism. According to HSBC's Navigator, only every fifth company in Poland is looking at the possibility of further development with optimism. At the same time, almost 80% of enterprises plan to increase investment in their own business and designate sustainable development goals. In order to rebuild the business after the difficulties resulting from pandemic restrictions, business leaders want to focus on improving the quality of products and services, invest in customer experience and expand into new markets. This is a great challenge not only for businesses, but also for institutions supporting their financing, and for the entire business chain in general. As the data shows, two-thirds of companies (64%) predict an increase in revenues this year. But as many as a quarter of companies around the world (24%) expect a decline in revenues this year.

In Poland, we expect GDP growth to return to its pre-pandemic level by the end of 2021. The economic performance recovery has been observed recently with exports and investments growing particularly strongly. Stable and low unemployment should support further consumer spending as the economy opens up fully during Q2 2021. With recovering and increasing sales volumes many companies are reconsidering their financial positions from medium- and long-term perspective covering both working capital needs and planned investments. Consequently, the sale of banking products is growing. We observe continuously increasing demand for bonds issuing including foreign market placements as well as the upside of the bank’s debt levels across wide range of product categories.

Nonetheless, we must not forget that the negative impact of Covid-19 such as zero or even negative interest rates as well as rising inflation, are just the tip of the iceberg. Many of the effects of the pandemic are not directly visible yet. Thus, we must be ready to overcome difficulties that are still to be discovered.

HSBC’s Navigator 2020 global survey of businesses suggests a two-speed recovery, with some regions and some sectors doing far better than others, with some still expecting to feel the effects of the pandemic for some time to come. How do the global results compare with what you see on the Polish market?

Generally, businesses growing at over 5% this year are making the majority of their sales online. And a narrower group, comprising 15% of companies, are enjoying revenue growth of over 15%. These leading companies are followed by a large pack of slower-growing firms. On the other hand, the proportion of companies that expect declining sales has doubled since 2019. A few sectors faced particular challenges, such as automotive and tourism. Needless to say, all businesses are conscious of downside risks.

For most companies, the pandemic has caused an evolution rather than revolution in operations. In Poland we distinguish three groups of enterprises. Almost a half of them (48%) introduced short-term changes. About a quarter of companies have undertaken long-term changes, and the rest of the businesses continue to operate as before.

It is believed that the scale of a company's success should be judged by how much the company's impact goes beyond the financial results and the profit for shareholders. The more important factors are innovation, responsible business practices and corporate culture. According to our statistics, nine out of ten companies predict revenue growth as a result of improved sustainability performance.

‘Sustainable finance’ is fast becoming a watchword; banks are eager to demonstrate their environmental friendliness. What steps is HSBC taking in this regard? Are demands for greater sustainability feeding into the way you relate with your clients – if so, in which ways?

There is certainly an observable trend in the modern economy that stresses the importance of sustainable finance, green development and corporate responsibility. At HSBC we see growing awareness how business can impact the environment but also how it can positively contribute to society. We do it both globally and locally. For instance, HSBC in Hong Kong maintains Sustainable Financing Programme for customers who chose to invest in environment-friendly equipment and technologies. We develop and maintain wide range of dedicated green and ESG linked products to meet specific requirements of our clients in all the geographies we are operating in. As a global group we understand and support the need of transformation towards increasingly greener economies.

Speaking of Poland, the newest issue of the Navigator report showed us that 80% of Polish companies monitor their progress in the area of sustainable development and set targets they want to achieve in terms of CSR. Business executives understand that care for sustainable development translates directly into increased profits, stability of the company and its positive image. This research outcome finds its reflection in real life. When talking regularly to our local clients we observe the breakthrough in approaching ESG matters from conceptual thinking into sustainability strategy formulation and its progressive implementation.

From the corporate banking standpoint, the most significant and game-changing global contribution we could possibly make is financing the transition towards a zero-emission economy. We, as a bank, support green businesses and help other companies to become such. Until 2030, we will allocate globally from $750 billion to $1 trillion for this purpose.

How is HSBC itself involved in green transformation on a local and global scale?

The ambition of HSBC Group is to support the transition to a net-zero global economy. On our side, we are working with a number of partners to increase investment in natural resources, clean technology and sustainable infrastructure. We provide expert advice to our customers and support them on their transition way to lower carbon emissions. To enable it, we are consequently expanding the portfolio of our green and sustainable products as well as transition finance solutions. We are pleased to see that the utilisation of ESG-linked products by our clients is permanently growing.

On local ground, we aim to offer our clients tailored sustainable finance products suitable for their individual needs and matched to their stage of transition. A good example of a kind of local-scale green transformation we support is modern railway development in Poland. We see trains as the mode of transportation of the future. Railway development also increases economic and transport inclusion, providing a wide access to fast, comfortable travelling. I am convinced that with the railway system developed sufficiently, it might be possible to minimise domestic air travel. Recently, a similar idea appeared in France: all domestic flights that could be replaced with a train journey of up to two and half hours have been suspended.

HSBC is committed to the transition to a global net zero economy. We believe that playing our part is not enough – that is why we want to lead it. We want to achieve this goal by supporting our customers in their own transition processes. However, we also ought to implement such a transition within our own organisation. We’re doing this across the bank itself – in our operations and supply chain. We want to be a well-managed organisation that people are proud to work for. The trust of our customers and the minimisation of our environmental impact are the key. We want to be an example that a transition to net zero can not only be good for the planet, but also benefit everyone in the first place. Our aim is to reduce carbon emissions from our operations and supply chains to net zero by 2030 or sooner. What’s more, we would like a similar level of engagement from our partners. After all, banks and other financial entities are institutions of public trust.

The European Green Deal (EGD) and Recovery and Resilience Facility (RRF) will be pumping unprecedented sums of money into the economies of member states. How do you see these grants and loans affecting the banking system in Poland? Will HSBC have a role to play in disbursing these funds to the private sector?

We are convinced that banking will play a huge role in this process. Financing the transformation is not only an industry goal, but an obligation. Currently, banks around the world actively participate in the financing of renewable energy sources. It would not be possible without the use of their own and EU funds. I am pleased with this global trend that financial institutions are investing in smaller and larger pro-ecological investments.

For sure, the implementation of the National Reconstruction Plan will indirectly or even directly affect the functioning of all economic entities and the life of every citizen. The main purpose of the plan is to mitigate the economic and social impact of the pandemic and assist local economy and society to be better prepared for the challenges and opportunities arising from the green and digital transitions. From the banks' point of view, the implementation of this plan is generally good news. Thanks to this initiative, the risk of crediting various projects, including those with high uncertainty of implementation, will be reduced or removed. As an active member of the local banking system we fully understand the importance of the National Reconstruction Plan for Poland and we are ready to consider the involvement in financing of individual projects under the plan which concern various areas, including energy, environmental protection, transport, innovation, digitisation or territorial cohesion.

Other than sustainable finance, what other trends are you observing in Poland? How are the latest developments in IT changing the way that banking functions?

The pandemic has significantly decreased the number of customers using services directly at bank branches. Last year, a large number of new digital banking users emerged, which has become a common standard. On HSBCnet, our main channel for business customers, downloads have more than doubled and digital payments increased by over 250% last year. Before the pandemic, business relied heavily on cash. Now it is marginalised in favour of electronic payments. Banks' customers are also interested in all kinds of cloud solutions. Professional and business clients expect the same experience they enjoy as consumers in the banking services. This requires banks to partner with innovative businesses.

The growing interest in non-cash payments has resulted in the emergence of a new generation of service providers who base their services on new technologies. Banks have to work with FinTechs in a considered way. Creating and managing them is challenging because they require collaboration between employees with many different skills and responsibilities. Also due to the development of new technologies, banks must constantly focus on the reliability of their payment services and protect themselves against cyberattacks.

The pandemic has forced banks to find a way to cut costs while building the capacity to support further growth. Tools using automation and artificial intelligence will have to be implemented. Employees will work more digitally and as a team – just like their customers. Therefore, many existing processes will change – organisational culture, hiring new employees, training, improving skills and attracting new talents. Managers – not just in banks – have to consider all of this. This applies to all employers and businesses.

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