HSBC reported higher-than-expected annual profits on Wednesday, driven by strong performance in its wealth and markets businesses. The bank also announced aggressive cost-cutting measures as its new CEO, Georges Elhedery, implements a strategic overhaul to enhance returns.
The London-headquartered bank revealed a new $2 billion share buyback plan, set for completion before the next earnings report. HSBC’s pre-tax profit for 2024 reached $32.3 billion, surpassing the $30.3 billion recorded last year and exceeding analysts’ $31.7 billion forecast. Despite falling interest rates, the bank maintained steady income growth.
Elhedery, who took charge in September, is focusing on streamlining operations and reinforcing HSBC’s presence in Asia, where most of its profits originate. The bank plans to cut costs by $300 million in 2025 and achieve an annualized reduction of $1.5 billion by 2026.
“We are actively optimizing resource allocation across geographies and business lines to enhance efficiency and maximize returns,” Elhedery stated in the earnings report.
HSBC’s Hong Kong-listed shares gained over 1% following the announcement, despite a broader market dip of 0.1%. Analysts welcomed the planned 8% reduction in personnel expenses over the next two years, though some noted the absence of major restructuring moves.
The bank is targeting a mid-teens return on average tangible equity from 2025 to 2027 but remains cautious about the uncertain interest rate environment.
In 2024, HSBC’s wealth and personal banking division posted a $12.2 billion profit, up 5.2% year-on-year, driven by increased customer acquisitions and wealth management sales. Its global banking and markets division saw a nearly 27% rise in profits to $7.1 billion.
The bank declared a fourth interim dividend of $0.36 per share, bringing the total for 2024 to $0.87 per share, including a $0.21 special dividend from the sale of its Canadian business.
Since taking over, Elhedery has reshaped HSBC’s leadership by cutting senior management positions and reorganizing operations along East-West lines. His strategy includes reducing investment banking activities in Europe and the Americas while deepening the bank’s focus on Asian markets.
