Interesting article about the bank fuelling lending focussed fintechs.
They have been writing $1bn of new loans per month all sourced from 15 or so VC backed fintech start-ups.
They effectively provide the regulatory infrastructure. Most loans are then sold off with a portion retained.
Some choice quotes – “Our strategy is to be the only financial services provider to the fintech ecosystem globally,” Gade says excitedly. “Changing people’s lives is why we do this, before anything else.”… “The talk about a recession or a credit cycle that’s going to start going the other way is much ado about nothing.”
Moody’s downgrades HSBC rating to negative outlook.
Credit rating is the key cost of goods sold variable for banks so this should be monitored carefully for any investors.
“The negative outlook on HSBC Holdings’ ratings is driven by the execution risk attached to the planned repositioning of HSBC Bank and of the group’s US business“. These businesses are 34% of risk weighted assets. HSBC has been restructuring for nearly a decade.
“and our expectation of subdued profitability in 2020 and 2021. It also reflects pressures on asset quality and profitability in Asia due to a more difficult operating environment in Hong Kong and the rest of the region“
“What is happening with cloud computing at large is to think about what the total spend in technology today is, it’s around 5% of GDP. On a secular basis, I think it’s going to be 10% which is going to double in the next 10 years. And that’s because every industry, whether it’s in retail, whether it’s in healthcare, whether it’s in manufacturing, they’re all being transformed by digital technology and this technology stack we have and the platform approach Microsoft has, means we will be able to participate in that 10% on the doubling of tech spend, but more importantly, really helping the global economy grow because of digital technology. And that’s what I think is the way to think about our opportunity.” Microsoft CEO
Sometimes it is about thinking about the big picture runway. Microsoft (MSFT) have a long one in front of them.
