HSBC Holdings plc (HSBA) Earnings Call Transcript

Good morning, London. Good afternoon, Hong Kong. Thank you very much for joining us today for our U.K. investor breakfast. I'm going to be super brief. Thank you for those who've joined in the room braving the closed Elizabeth line and making it here. If there's 1 or 2 people squeezing in late, we won't judge them quite as harshly as we usually would because we understand. I'll be hosting Q&A with David and Jon at the end, there will be time for people in the room, those on Zoom should put their hands up in the usual way. With that, our U.K. Chief Executive, David Lindberg. Thank you.

Good morning, everybody. Thank you for coming. So early in the morning on a Monday, and I hear there's all sorts of fun with the trains. So thank you for making it. I'm David Lindberg, Pleased to see you all here. I'll be joined by Jon Bingham, who I know you'll all know, who'll be familiar to you as he was the acting group CFO and also more recently, the Group Financial Controller. Now a lot of what we're going to talk about today is going to be familiar to you from presentations. I know many of you saw in Birmingham in 2018 and also in 2022, also from our interim results and our seminar in Hong Kong in May. But this is a story of consistency and commitment, but also one of growth potential in the U.K. as a whole market for the bank. Our strategy is simple, and we've already been executing on this strategy. Now we'll be disciplined on new disclosures today, but I really hope there's enough new information for you to make this valuable. I'll spend a few minutes outlining our overall presence in the U.K. before diving into our larger U.K. businesses. But I want to stop and give my 3 key messages for today. First, we are the leading international bank in the U.K. We're a scale player for the largest corporates through to a full-service retail bank, and our market position is unique. We are leading in trade and payments for international businesses. And as you know, the U.K. is an extremely open economy. Second, we're growing what is already a market-leading commercial bank. We're investing more and importantly, we're leaning on our strengths. Our ability to pool our investment with CIB in Hong Kong, the shared capability and infrastructure is a strength that is unique to HSBC. Our share in the fast-growing middle corporates is lower than our capability should allow. Third, we intend to thoughtfully grow our retail bank. Retail is the largest profit pool in the U.K., and we've allowed our share to slide in recent years. We'll focus more on the segment but with disciplined margin management and an ambition to build market-leading digital capabilities that will provide better service to our customers and importantly, operating leverage over time. Now behind me here, this is a slide you will have seen before. It demonstrates our scale and the connected nature of our business. Within the U.K., we are a top 3 bank and relative to our peers, we're overweight in commercial and we're underweight in retail. This reflects our heritage as a global commercial and institutional bank. Our ring-fenced bank is a leading player, but we add 1/3 of revenues and more than half the deposits if we include the U.K. operations of CIB. An important differentiator for us lies in our ability to invest with the other 3 core businesses of HSBC to deliver capability to our customers that our local competitors struggle to match, leveraging our global scale to give customers world-class capabilities. We think this advantage is underappreciated. Now I know you'll be interested in margin, and you'll be interested in competition, and Jon and I will be happy to talk about that during Q&A. But you can see that this business is at scale, and this business is growing. We grew revenue by 7% year-on-year and 7% growth in our commercial loans or customer loans. The U.K., as you know, is a competitive deposit market. You saw in the group presentations recently, the strength of our deposit position. In the U.K., we have more deposits relative to our loan book compared to competitors. Our deposit base is more weighted to current and operating accounts. And that gives us the capacity to grow loans to core clients when we see opportunities. Now this slide here shows some new disclosures to help you see our leading position. Some of our payments and trade business is booked in the ring-fenced bank, and some in the non-ring-fenced bank, and that largely reflects client scale or clients that are connected with international parents. By putting them together, you see that of the top 5 U.K. banks, we have a 29% market share in corporate payments with a substantial lead to our closest peer and have a 27% market share in trade where the lead is even larger. We're the world's largest trade bank, especially in the U.K. For an economy as internationally active as the U.K., this is a material differentiator for our clients. And it's interesting to note that so many of our peers shrank back to a domestic focus over the course of the last 15 years. We have commercial capabilities, peers struggle to match, and we have the opportunity to drive our leading trade and payments capabilities further down our customer base. Now let's turn to our U.K. operating segment, which you'll be familiar with from our quarterly reporting. The U.K. segment has a return on tangible equity of 21.4%, and the U.K. segment is already very cost efficient with a cost-to-income ratio of 41%. We already have world-class capabilities that we think should allow us to grow in profitable segments. And we're investing across retail and our commercial bank to improve our digital capabilities and our end-to-end customer journeys. Importantly, we're also staying true to our future-state technology architecture road map. This investment will enable us to improve NPS. It's going to drive operating leverage and position us for long-term growth in segments where we think we have the right to win. Our strategy is to build on our strengths to grow our leading position in corporate banking for large corporates and importantly, middle corporates, where our share is lower than it should be given the capabilities that we've already built to bring more of our leading commercial capabilities to the SME market and to build world-leading digital capabilities in retail. So let me get into the detail. First, in Commercial Banking. Of the total U.K. revenue I showed on Slide 3, we earn around 1/3 from this business. Our U.K. operating segment, it's around half the revenue though strong cost control means this business drives more than half of our profit before tax. These 2 views are reconciled for you in the appendix, but our commercial business is truly market leading. Now you see on the left hand of this slide, the pyramid breaks down our customer base. And as you can see, we're #1 for large corporates, where we have a relationship with around 2/3 of customers in the market. But in middle market, we rank second with significant room to grow. And we're #4 for smaller businesses where market share is a clear opportunity. Our innovation bank is market leading. We participate in 4 in 10 Series A funding rounds. And this business gives us access to the broader innovation ecosystem and is deeply integrated with our global innovation banking capabilities. Innovation is global, and so is our offering. And no other U.K. bank has this offering. The commercial bank is well diversified with meaningful contributions from each of our 4 segments and attractive returns across them. Before I turn to the growth plan, let me spend a little time on the benefits of our integrated global presence. We support customers banking across the 56 markets in our network. Our strong product capabilities are enhanced by our dollar and local currency liquidity in our key markets. And we can leverage HSBC's scale. As I said, the U.K., Hong Kong and CIB invest together and the benefits are enjoyed by customers of all 3 businesses. Think of the digital innovation that my colleague, Manish, shared with you, while in Hong Kong in May. We launched HSBC Neo, a digital solution that is already globally market-leading. And also, it's already been deployed to our U.K. corporates. These world-class capabilities allow us to serve our largest corporate clients. But there are also capabilities that are equally important for U.K. middle corporates. The scale of HSBC global investment gives us a real competitive advantage. And we also work to capture the full client wallet including continuing to refer our business owners to our private bank. Let me tell you about our growth strategy, starting with business banking. As one of the group's home markets, we're building our leadership position in this segment as we already do in Hong Kong. And this is already about 1/3 of CMB revenue and we have not done this segment justice under our old matrix reporting structure. We lack management focus and we under-invested. Average onboarding time for customers used to be around 30 days. With one team now accountable for the U.K., we're back in competition. You already heard George talk last year about the investments that we're making. We now onboard a majority of our customers in 24 hours. Our pricing is also now more competitive. We've added RMs and they sit across the country close to our customers. Our investments are also now beginning to deliver results. New customer numbers were up 23% versus last year and our service score improved 9 points, the largest improvement of any provider in the U.K. We're looking to build on this, and we're looking to take market share and we'll be focused on strengthening our digital offering through our dedicated business banking platform sharing more of our leading transaction banking with business banking clients, and in acquiring more business banking customers. Turning now to corporate banking. As the largest bank for U.K. corporates, this is our true leadership position in the U.K. Our offering is comprehensive, covering both domestic and international corporates, and this is where our network gives us a particular edge. And mid-market is the fastest-growing commercial segment in the U.K. Now I want to talk about mid-market even more. With a 33% market penetration, we've got room to grow, and we're investing, and this is a priority for us now. In 2025, we built a proprietary database of target middle market prospects, [indiscernible] know who to call and why. Since the end of 2024, we've added around 500 new customers, equivalent to about 8% of our existing stock. This contributed to a 15% year-on-year increase in lending and we see a substantial runway of prospects in sectors that we know, and we also know we can serve well. Improving frontline capacity is another way will drive growth even further. The complexity of some of our internal processes have limited how much time our RMs spend with clients. We've really undersupported our own bankers, and we're fixing that. procedures are being simplified, queries are being routed to the right person the first time, and AI insights are better informing our bankers. We're not using this efficiency to reduce bankers. Instead, we're using it to grow. In fact, we are adding frontline bankers. And as with so much else, we're doing this work and leveraging our global scale. And turning now to our retail bank. As with commercial, it contributes around 1/3 of our total U.K. revenue and the remaining half of the U.K. operating segment. It's a significant proportion of our balance sheet and provides funding and liquidity to the broader U.K. business. This business has already a substantial scale with about 14.7 million customers. The deposit strength I mentioned is evident here. We have an 8.8% share of deposits, where 72% of those deposits are instant access. We've been working to improve the experience our customers have with us. The progress we've made is evident across our 3 brands, as you can see on the left of this slide. But having said that, retail banking is shifting, and we must improve our performance. We're investing in retail to have the very best app anywhere in the world. The very best customer journeys leveraging our group-wide value stream framework, thoughtful and purposeful use of AI to improve customer experience and still the best human support when our customers need it. AI will make humans more valuable to our customers, not less. Now in the U.K., digital capabilities are already world leading. Having great apps and digital journeys are key to deepening relationships and driving customer primacy. And they're also key to creating operating leverage for our business. Operating leverage is absolutely necessary to competing and to growing in this market. So let me talk about our app, which is the key customer service tool in retail banking. We launched North Star in 2025. This was a collaborative investment between markets across the group. Again, you can see the theme I keep talking about, leveraging HSBC's scale to serve U.K. customers better. We initially launched North Star in the U.K. and Hong Kong, and it marked a significant improvement to the look and feel of customers everyday banking. We're in the process of rolling it out across several IWPB markets, as Barry would have mentioned in June. And customers are responding. We now rank third amongst major U.K. banks for digital engagement. Our mobile ranking is up 3 places over the past 12 months. And it's also reducing call center volumes, improving both service and efficiency. But we've only just begun with the journey of this app. But our future digital priorities are now incredibly clear. We will offer the best banking app anywhere in the world. We're going to digitize our end-to-end processes. We're going to use AI to improve service to our customers whilst providing human support when our customers need it. We're going to simplify underlying platforms with discipline, and we're going to leverage the scale of HSBC's global investment. You'll see major improvements in the coming months. Let me turn now to platform simplification, and why it's so important. Disciplined platform investment reduces costs over time. Let me bring this to life for you using mortgages as an example. We're a leading mortgage provider. We have an 8.3% market share in mortgages, but legacy platforms still constrain capacity and consistency of service. So we're moving to a common platform, which will enable faster decisions for customers, will increase capacity and lower the cost to serve. It will soon be possible for customers to get a mortgage approval with HSBC in 15 minutes. Finally, let me spend a minute on the strength of our mass affluent franchise. If you remember, Barry, Maggie and others spoke about HSBC Premier at our May seminar. We launched Premier 26 years ago as the first global financial service for personal banking customers. That heritage helped us build a significant customer base of affluent customers in the U.K. with just under 1.1 million affluent customers at year-end 2024. It's an attractive segment in terms of profitability. Though this means it's obviously also very keenly contested in our market. And our international capabilities give us an advantage. Around 80% of premier customers are international. We relaunched Premier in late 2024, adding more than 40 new or enhanced features and Premier deposits are up 8%. Our NPS ranking has improved by 3 places since 2022. We intend to protect and also to keep growing this segment. With improvements to our offering planned, enhancements to our product suite, upgrades to our reward platform and a shift in wealth from an adviser heavy model to a more digitally focused one. although still offering clients adviser support when they need it. We're increasingly embedding wealth solutions in our app because that's what customers want. We'll have the full range of products and tax wrappers that customers need but all in their app. And again, we're leveraging platform capabilities from Asia Wealth Management business wherever possible. So to close, I hope today, we've demonstrated the scale of the U.K. franchise across the ring-fenced and non-ring-fenced banks. Clarity on how we plan to invest to win in each of the segments of this U.K. franchise, along with clear room to do just that. The advantages we can deliver to customers by working together across the water HSBC business, unmatched scale should create unmatched capability. Our focus on simplification through digitization and systems discipline and finally, the strength of our balance sheet and the options our balance sheet gives us to maximize returns across the ring-fenced and the non-ring-fenced portions of the U.K. business. So thank you very much, and I'd like to invite Jon now to take some Q&A.

Thank you, David. Welcome, Jon. We have plenty of time for questions. We wanted to move through that at pace. I suspect, over the last couple of weeks, you've developed a few questions for our U.K.-focused businesses. We'll take questions first from the room. Thank you for joining us. We'll give people in Asia, the opportunity to ask online as well if anybody wishes to One per company plays until we go around. And then finally, if there's any space, anyone in London online. I'm in charge of the microphone as well. So I can see Alvaro first, just to introduce yourselves. We'll go to [indiscernible] second.

Alvaro [indiscernible] from Morgan Stanley. A couple of questions, please. You've mentioned market share wins both in middle market segment and in retail. Maybe you can give us a flavor what you think your natural market share should be in the long term? What are your ambitions in terms of market share? And second, I had to ask about deposit competition. You've got an offer out there 4.5%, which for the incumbent or the leaders in the market is probably on the more aggressive side. So can you sort of maybe talk us through the rationale for the pricing? Why now? And also you've got multi-brand strategy. So sort of how did you think about sort of doing it where you ended up doing versus sort of focusing on a different brand to the main brand?

Thank you. Why don't I start with the market share question, then maybe Jon can talk to what we're doing on deposits and pricing more generally. I think through the course of time, we obviously already have a dominant position in corporate. But if you look into that, we have just over 70% market penetration but our share is a bit lower than that. So we think the opportunity to deepen in that segment is the real opportunity for large corporates. As I said, middle corporate was a business we never even had 6 years ago. And it leverages all the same capabilities that large corporates have, and so we think the opportunity to grow there is really quite large, and we should be able to get close to our share in large corporate over time in the middle market segment. Business Banking, again, fourth, we've taken our eye off the ball there probably for 4 or 5 years. we're slowly getting that back. And again, we can start to creep that up, although I think in fairness, that probably lags a little bit where we would be in the 2 corporate segments. And then I want to be pretty clear on retail. Most of what I've talked about today and most of the big investments we're making early our digitization. That fundamentally is about getting current accounts. It's about getting operating deposits about giving us liquidity and optionality into the future with our balance sheet. And so we think we can slowly start to grow that share, but I also want to be very clear that we're trying to grow value, and we're not chasing market share. And so if you think about some of our assets, particularly on mortgages, there'll be times when we like the margin in mortgages, there'll be times we like it a little bit less and our balance sheet gives us all sorts of options for where we place our liquidity across our asset classes. And so you just expect us to be rational. We're not going to learn in an alert out but we'll rationally look to take a little bit more share, say in mortgages, when we're pleased with the deposits and maybe look to support more corporate lending when that's the rational choice on the margin side of things. Maybe, Jon, talk a little bit about the pricing on deposits.

And I suspect this audience is very familiar with some of the deposit competition trends. But just level set. So we did see increased competition in deposits through Q3. That's a mixture of a number of system-wide factors. So you've got lending growth, which is the whole market, and we are seeing specifically -- we've seen some quantitative tightening, and we see certain deposits being used by non-lending organizations. We have seen some of that, and we've seen some modest moves into term deposits, but those have been relatively modest. But we start from a very strong position. So as you saw on the slide, we've got $0.5 trillion of deposits across the U.K. franchise, the U.K. has one of the leading loans to deposit ratios. And crucially, we have a lot of options because a number of our deposits come from corporate customers as well. So we will take -- in some cases, we will take opportunities, particularly with interest rate volatility to put out fixed rate products, which are attractive. But those are to maintain competitiveness. We will continue to be very disciplined, and we're not seeking or don't need to chase deposits to fund our growth at the minute. And what will become evident, we've had the recent interest rate change in us Thursday, we stuck to our standard across the various products, we vary it by products, but if you aggregate that, we stuck to our standard 50% pass-through assumption.

Thank you. We'll take Kian next.

Kian Abouhossein from JPMorgan. You had a good Slide 7. We have the triangle with the different segments and growth segments that you want to focus on. If you can maybe bring that up as possible and discuss a little bit how you think this should be changing over time? Yes, exactly. Considering you're more focusing at the lower end of that triangle growing that piece, I just want to understand how that should change over time? And how we should think the journey to get there in terms of timing? And secondly, just very briefly, if you can also talk about positive operating leverage. How should we think about positive leverage considering the ongoing investments over the medium term?

Great. Thank you for the question. So I mean it's difficult to give targets based on numbers as aggregated as these. You can see that we have 4 segments. If you loop the innovation banking in with large corporates, we probably do 1/3, 1/3, 1/3 in terms of revenue. Each of those segments has ROE well above the cost of capital, and we're happy with those. Although as you probably would know, the ROE might move up a little bit as you move down the segments and also the liquidity value might move up as you move down the segments as well. So I'll be cautious, I would say the innovation bank is probably a place that we're looking to grow, and that's consistent with these are high-growth businesses, and we have a dominant market position in that segment. As I said, over the shorter term, we're looking to grow the middle market segment relative to the corporate segment, and you've seen that in the last quarter, and in fact, the last year of our results where we've been growing that middle market segment, roughly 15% lending growth, which we're happy to fund and those are good returns. So maybe a little bit more in that segment. And then Business banking is a platform play. This is a business that will grow slowly over time. But once you have scale, once you have capabilities, once we've invested more, not just in the marketing and the pricing, which we've already done, but in the platform to give us advantage and over time to suck down the capabilities that we're already putting into a system like Neo into the business banking platform, we think that will build capability and share over time. I'd be remiss to give you exact guidance in terms of how these move, but roughly, that's how we think about it.

I'll pick up on the operating leverage. So we're very pleased with our operating leverage if you express it as a cost income percentage. So I think David quoted 41%, which is including notables, ex notables, that's close to 38%. I think how you should think about that is we are driving operating leverage through the business but we do want to make a number of investments. So I would see that remaining relatively static over the medium term in that we can fund our investments through the gains we're making out of driving platform operating leverage.

And I'll just add to that because I'm obsessed with operating leverage. I think there's a race, particularly in U.K. retail banking to achieve operating leverage as quickly as possible. I think our ability to grow transactions and grow customers without that resulting growth in costs is essential. All else being equal, that will start reinvesting those savings over time in growth. So again, I don't know that you'll necessarily see that in a significant reduction in the overall cost-to-income ratio. But what you will see is our ability to reduce the cost to serve customers giving us the ability to remain competitive and serve our customers and grow.

It's James Invine here from Rothschild & Co Redburn. I've got two, please. The first is, just on your structural hedge in the U.K., just to help us understand your U.K. numbers, could you please give us the size and yield of your structural hedge at the moment? And then the second question is about the structure. So you are presenting HSBC in the U.K. here this morning, but that is spread across 2 legal entities with 2 different CEOs. How much of that is an impediment to your business? And is there anything that you can do in terms of the structure of what sits in one entity or the other to improve the performance of the business going forward.

Why don't I take the second and then Jon can take the first. I would take a step back and ask, how did we deal with this through the course of the last 5 years. And I think arguably, it has been an impediment. We have certain restrictions relating to ring-fencing. I think today, with 4 businesses and also with my seat at the group OpCo, we have a much more collaborative relationship. And Michael Roberts, obviously runs CIB, Barry runs IWPB, but the 3 of us really work on one go-to-market strategy in the U.K. And take large corporate, there are some large corporates that happen to sit in CIB that some happened to sit in the ring-fenced bank. But we work together with one go-to-market strategy there. As it relates to fungibility on the balance sheet, there are restrictions that ring-fencing does sort of give us but there's also a lot that we can do. And there's a lot of business that say a CIB could write that we can have choices around which balance sheet it sits on. And so I have the opportunity to think about that. But my goal and Michael's goal and Barry's goal is to optimize for the U.K., not to optimize for each of those 3 businesses. And I think today, we have the culture maturity to do that. That's a real opportunity. I don't think we've been leveraging in the past.

On the structural hedge, you'll be very well aware, we don't give the U.K. individual figures. But if you take the group figures of our structural hedge, I think the Q3, we disclosed the structural hedging total was $655 billion, 3.2 years maturity, 3.5% yield. And we say the U.K. is the biggest proportion of that. Actually, if you model the U.K. on those similar parameters is not far off the group given how much of a majority we have. And so we are seeing that we are able to particularly now invest in still incrementally high yields. The maturity of it, we give the group maturity. The U.K. maturity is also pretty smooth going forward over that yield profile. So whilst I'm not able to give you the U.K. numbers, if you model it based on the group numbers proportion down, you don't get too far wrong in terms of trends.

This is Ben Caven-Roberts from Goldman Sachs. You gave some helpful color around deposit trends. Could you give a bit of color on asset margins, please? And how those are varying in your outlook across different segments? And then secondly, just following up on your point around building the best app in the world and having that come through in 2027. Could you talk about how you view the role of the app in the relationship with the customer in retail? And if you think that changes at all over the coming years?

Thank you. So we'll be a bit circumspect on talking about specific margin by product and maybe Jon can build on some of this. Certainly, there's been a lot of discussion about deposit margins and liquidity Asset margins, I would say we have real options. And so by and large, you see corporate asset margins being higher than you see in retail. And so that gives us the opportunity to take advantage of those. And then within retail, the big asset class, of course, is mortgages. Over the last little while, the mortgage margin has been a little bit lower than we would have liked. And you can see that we haven't been significantly taking share there. There were periods of time this year where it was a bit better. And on that basis, we did a bit better during that time period. We'll see how that plays out. But I guess the message I want to share is that, a, we have discipline, we really understand these margins, and we're looking to grow when we're happy with the margin. And b, we've got options across the ring fence non-ring fence to really optimize the asset side and in fact, the deposit side of that margin as well. If I then turn to the app, the app is what every retail banker just must obsessed with. The role it plays -- nobody will know for sure how it plays out. But I think the starting point is it still has to have the best look and feel, still have all the capabilities. I talked about wealth and for a long period of time, I think, in this market, people thought of retail on this side and wealth on this side. But from the customers' perspective, they want to see it all together. And wealth feels like long-term savings for a lot of our customers with similar purchasing journey. So we're really just trying to bring all that together in a really simple, usable format for our customers. And then we've got the advantage I've been talking about, which is take -- we've got a big Asia Wealth business. They're investing in global capabilities for investments. When we get to leverage those and put them into our app and serve our customers better as a consequence of that, but we didn't have to make those investments ourselves from the U.K. So I think that's a huge advantage to us. Now if I went further into the future, certainly, AI and the ability to authenticate customers on the app, serve them using AI on the app, leveraging right back into the call center. I think you had it coming together of the contact center channel and the app channel using common identification of customer and that you give enormous opportunity to reduce costs, but more importantly, to serve customers better. I keep asking the question -- what can we do not to save money with generative AI. But what can we do to do things for customers that we've known they've always wanted because we have generative AI. And one of the classic examples is we can solve the wealth gap over time or the advice gap over time and give customers that are in the retail business, services that they've never had before. So I really think the app becomes the centerpiece and a lot of the other channels start to hang together off the app using the same authentication layer.

If I might just make one add-on point on the on the margin. So we disclosed at the half year, whilst we don't target or give guidance on the margin. At the half year, we disclosed for the U.K., the margin was broadly stable. It actually gone up a little bit from 2.62% to 2.66%. So when you put into your models, obviously, you'll be factoring in some level of thought of deposit competition and issuance costs, et cetera. But the important balance to that is we have changed the shape of some of our lending. So whilst we're growing lending overall at 7% within their commercial is growing at 13% and that's typically at higher margins. So you'd want to model that as an offsetting effect to some of the impacts on deposit.

We'll take one more from the room, and then we've on online in Hong Kong.

Guy Stebbings at BNP Paribas. The first question was regarding onboarding on the business banking side. You talked about previously 30 days onboarding and that coming down to less than 24 hours. Is that something that happened quite recently? Because I could imagine the 38 was quite an inhibitor in the past. Just wondering if that's sort of created a step change that were more recently? And the second question, as you move away -- or sorry, as you come from a slightly underweight position, as you framed it in retail, does the balance sheet of your U.K. retail business look different in the future? Does it look a bit more like some peers and that sort of thing as we think about moving away from that underweight position.

So I'll start with the first question in terms of business banking and maybe touch on the second, you will as well. So we just hadn't invested in the U.K. business in business banking for a long time. Part of that was a reflection of our global line of business and these felt like smaller customers. But when you really look at the dynamics, as we showed, it's a massive profit pool business banking with great liquidity and great return on equity. And so we started to invest. We put more money into marketing. We put more money into bankers. But the longer-term investment is the platform itself. And we have a platform that is bespoke just to the segment now. It's called DBB. It's a really modern, well architected platform. And we're building the journeys in that platform. And one of those journeys is the onboarding journey. So to say that we had 30 days to onboard a client, is ridiculous. And guess what, we got exactly what we deserved, which was a loss of market share that was quite significant over the course of the last 5 years. We fixed that recently. And that's one of the things that's driven that 23% increase year-on-year, along with pricing and along with marketing. So I think all 3 contributed. But if you can't onboard a customer in less than 30 days, you're just not going to take share in this segment. Do you want to touch on the second question and I'll come back.

Yes. I mean the balance sheet will evolve as we move from an underweight retail position. But maybe 2 things that we'll continue to hold true throughout that is the value we place on deposits. So we will continue to have an industry-leading asset-to-deposit ratio. And the -- we've given you figures of the 72% in since. We are very keen on protecting that for obvious reasons. And secondly, will continue to remain with a conservative stance to credit risk. So within all that, we will grow unsecured somewhat. But that's from -- we currently have about $19 billion of unsecured and that grew relative to last year at 5%. So it's not going to -- with those 2 guardrails of value of deposits and conservative credit risk appetite, it's not going to radically transform.

And if I could just then build on that. If you look at our target segment, it's the high deposit segment. So Premier customers probably expanding that a little bit, but you would still look at us as a premier target market relative to competitors, that gives us the operating deposits that fund the balance sheet and gives us the stability that we're looking for. And if you look at all the investments we're making, it's in the everyday banking side of things. So we're actually trying to get the operational deposits of all of our customers, but including our retail customers. We think, over time, that gives us a better balance sheet structure than trying to go for all customers and take all asset classes at the same time. And the final thing I'll say is, again, we're always going to be circumspect on the assets that we put on our balance sheet. And we have got options across the business where we have those 4 really strong businesses that can attract that capital and liquidity.

Thank you. Next question is Xinyu Wang China Securities.

This is Xinyu from China Securities. And my question is just about [indiscernible]. I know that the cost income ratio for the U.K. stands at around 40%, just higher than the back of Hong Kong. And as we know, the AI adoption and the cost domination? Is there further room for the U.K. cost income ratio to decrease. Is there a [indiscernible].

Great. Thank you for the question. So in terms of cost-to-income ratio, comparing it to Hong Kong, we do have a market-leading cost income ratio already. It's really worth making that clear. That's particularly true in our commercial bank where we've got scale and we have really good cost control and the ability to leverage group systems. I said 41%, it's come down a little bit in the quarterly reporting as you'll see. There might be room for that to come down a little bit. But I would just stress we have the ability to be much more efficient. That efficiency and operating leverage is really going to give us cost opportunities into the future. But there's still going to be requirements for us to invest in the business. One of the reasons we haven't done what we wanted to do in retail is we probably haven't invested enough in the platforms and underlying systems. It's hard to imagine the need for that investment to go away entirely over time. So there'll be efficiencies. We're already at a market-leading cost-to-income ratio. Some of that might come down ever so slightly, but I wouldn't say that, that is the core ambition that we have on cost.

Thank you. I saw a question in the room.

It's Andrew Coombs from Citi. Two interconnected questions. Firstly, thinking about your retail deposit mix because you just talked about that 72% bigger. That's actually relatively low versus some of your peers. So I'm just trying to get a feel for -- do you think that's because of your customer mix where you're targeting more of a premium or affluent customer base is more likely to have their money sitting in term? Or do you think that reflects constraints around your ring fence LDR and LCR? And the second question, just a follow-up on the ring pending point earlier. I think the inventing probably is more of a obstacle to yourselves compared to some of the other banks. And I was very interested in the comment you made about the fungibility and making or electing where the CIB business can sit. Because if we look at your ring-fence LDR at 88 and your nonringfence bank LDR at 22. Obviously, if there's an increase in fungibility that has huge implications for your business and what you can do to extend credit on the retail side. So interest any thoughts or any more you can color you can provide there?