Hong Kong (Reuters) – HSBC has reported stronger-than-expected financial results for 2024, with pre-tax profits rising to $32.3 billion, surpassing both analyst expectations and last year’s performance. The earnings growth was driven by solid gains in the bank’s wealth and markets divisions, underscoring HSBC’s ability to adapt to shifting economic conditions. As the bank celebrates this financial milestone, newly appointed CEO Georges Elhedery has unveiled a bold restructuring plan, with a targeted $1.8 billion in cost savings over the next two years. The initiative is designed to enhance operational efficiency and strengthen HSBC’s focus on high-growth markets, particularly in Asia.
Elhedery’s leadership comes at a time of global economic divergence, with major central banks taking different approaches to monetary policy. While the Federal Reserve maintains its current stance, the European Central Bank considers potential rate cuts, and the Bank of Japan signals a move towards tightening its monetary policy. This uncertain economic environment has led HSBC to adopt a more dynamic strategy, balancing cost efficiency with targeted investment in growth areas.
The bank’s latest earnings report reveals that its core businesses continue to perform well despite external challenges. The wealth and personal banking segment, HSBC’s primary revenue generator, reported a pre-tax profit of $12.2 billion, a 5.2% increase from the previous year. This growth was fueled by an expanding client base and rising demand for investment products. Meanwhile, the global banking and markets division saw profits climb 27% to $7.1 billion, reflecting strong trading and advisory activity.
A cornerstone of Elhedery’s strategic plan is cost discipline, with HSBC targeting a $300 million expense reduction in 2025 and a total annualized cost base reduction of $1.5 billion by 2026. One of the most significant changes involves an 8% reduction in personnel expenses, a move aimed at streamlining operations and improving financial agility. The CEO emphasized that these measures are essential for optimizing the bank’s resource allocation and enhancing long-term profitability.
In response to the earnings announcement, HSBC’s Hong Kong-listed shares rose by more than 1%, indicating investor confidence in the bank’s direction. Market analysts have largely welcomed the restructuring plan, viewing it as a necessary step towards improving efficiency and maintaining HSBC’s competitive edge.
As part of its commitment to shareholder returns, HSBC has announced a $2 billion share buyback, set to be completed before the next earnings report. Additionally, the bank declared a fourth interim dividend of $0.36 per share, bringing the total annual payout to $0.87 per share, including a special dividend linked to the sale of its Canadian business. The decision to divest from Canada aligns with HSBC’s broader strategy of focusing on core markets with higher growth potential.
Elhedery has also taken bold steps to reshape HSBC’s organizational structure, implementing an East-West operational model and scaling back investment banking activities in less profitable regions. By reducing its exposure to lower-margin segments in Europe and the Americas, HSBC is doubling down on its commitment to Asia, where it continues to see significant growth opportunities.
With these transformative initiatives now in motion, HSBC’s future performance will be closely watched by investors and industry analysts. The success of its efficiency drive and strategic repositioning will play a critical role in shaping the bank’s trajectory in the years ahead.
