The bank’s annual profit exceeded expectations, driven by increased revenue in its wealth and markets divisions. A key component of the new strategy includes a $2 billion share buyback, planned to finalize before the upcoming earnings report. This financial performance is noteworthy against a backdrop of varying central bank interest rate policies across different regions. While the euro zone may cut rates, the US is holding steady, and Japan is anticipated to increase them.
Elhedery, who assumed the CEO position last September, is sharpening the bank’s focus on Asia—a region where it earns most of its profit. HSBC’s reported profit before tax in 2024 was $32.3 billion, which surpassed the previous year’s $30.3 billion and exceeded analyst projections. The bank is pursuing cost reductions, with expectations to trim expenses by $300 million in 2025 and achieve a $1.5 billion annualized cost cut by 2026.
“We have renewed vigor in finding the efficiencies that will optimize our resource allocation,” said Elhedery. “This will enhance how we actively manage costs and capital and target investments.” Following this announcement, HSBC’s shares in Hong Kong rose over 1%, despite the wider market’s slight decline. Michael Makdad, a Senior Equity Analyst at Morningstar, remarked that while personnel cost plans are positive, the streamlining process involves many detailed and coordinated efforts within the bank’s operations.
HSBC’s aspirations include achieving a mid-teens return on average tangible equity from 2025 to 2027, even as interest rate forecasts remain unpredictable. In 2024, the wealth and personal banking sector, a significant revenue generator, achieved a profit before tax of $12.2 billion, marking a 5.2% increase. The global banking and markets sector saw profits rise by nearly 27%, reaching $7.1 billion.
The bank plans to distribute a fourth interim dividend of $0.36 per share, totaling $0.87 per share for the year, including a special dividend from its Canadian business sale. Elhedery, who swiftly transitioned from CFO to CEO, has expedited restructuring efforts by reducing senior management positions and reorganizing divisions to bolster its Asian market presence.
HSBC is poised to implement significant cost-saving measures and strategic adjustments to reinforce its profitability and market standing in Asia. With a focus on efficiency and resource optimization, the bank is set on navigating interest rate challenges and pursuing its financial targets.
