Hong Kong (Reuters) – HSBC has delivered an impressive financial performance for the year 2024, reporting a profit before tax that exceeded market expectations. The strong results were bolstered by steady growth in its wealth and markets divisions, even as the global economic landscape remained complex and uncertain. Alongside the upbeat earnings, HSBC’s new Chief Executive Officer, Georges Elhedery, has outlined an ambitious cost-cutting plan that aims to streamline the bank’s operations and sharpen its strategic focus on Asia, where it generates the majority of its revenue.
The financial year’s results come at a pivotal moment for HSBC as Elhedery accelerates his plans for a broad restructuring. Since assuming the top role in September last year, the CEO has sought to reposition HSBC for long-term success by reshaping its business model, optimizing capital allocation, and implementing a disciplined approach to cost control. His tenure began against the backdrop of shifting global monetary policies, with the European Central Bank signaling potential rate cuts, the Federal Reserve maintaining a stable stance, and the Bank of Japan preparing for a possible rate hike. These factors have created an environment of uncertainty for international banks, compelling HSBC to adopt a proactive and adaptable approach.
For 2024, HSBC reported a pre-tax profit of $32.3 billion, up from $30.3 billion in the previous year. The results outperformed analyst projections, which had forecast an average of $31.7 billion in pre-tax earnings. Despite downward pressure from fluctuating interest rates, HSBC’s revenue streams demonstrated resilience, reflecting the bank’s ability to navigate external headwinds while maintaining strong business fundamentals.
As part of his cost-cutting strategy, Elhedery has set a target of achieving $300 million in savings in 2025, with a more ambitious plan to reduce the bank’s annual cost base by $1.5 billion by the end of 2026. A significant component of this initiative involves an 8% reduction in personnel expenses over the next two years. The CEO has emphasized that these cost-cutting measures are not merely about reducing expenditures but about ensuring that HSBC’s resources are allocated efficiently across geographical markets and business segments.
In his statement accompanying the earnings report, Elhedery reinforced his commitment to improving operational discipline. “We have renewed vigor in finding the efficiencies that will optimize our resource allocation, be that geographical, business line, or balance sheet. This will enhance the way we actively and dynamically manage costs and capital, and target investments,” he said.
The bank’s restructuring strategy has been met with cautious optimism from investors. HSBC’s shares, listed in Hong Kong, rose by more than 1% following the earnings announcement, in contrast to a slight decline of 0.1% in the broader market index. Financial analysts have acknowledged that while the cost-cutting measures are a step in the right direction, they do not represent a radical departure from standard banking efficiency strategies.
Morningstar Senior Equity Analyst Michael Makdad noted that HSBC’s efficiency drive is about managing a complex set of incremental adjustments rather than executing sweeping structural changes. “Plans to trim personnel expenses by 8% over 2025 and 2026 are positive, but I don’t see a lot of eye-catching overhauls or drastic cost-cutting measures in the release. That’s not necessarily a bad thing—improving efficiency at a bank of HSBC’s scale requires careful coordination of numerous small and midsize adjustments,” Makdad said.
Alongside the cost-reduction plan, HSBC has announced a $2 billion share buyback program, which it intends to complete before its next earnings report. This move reflects the bank’s ongoing commitment to returning capital to shareholders while maintaining a strong financial position. Furthermore, HSBC has reaffirmed its target of achieving a mid-teens return on average tangible equity (ROTE) for the three-year period from 2025 to 2027, though it acknowledged that ongoing interest rate volatility could pose challenges to its financial outlook.
HSBC’s wealth and personal banking division, the bank’s most profitable segment, recorded a pre-tax profit of $12.2 billion in 2024, a 5.2% increase from the prior year. This growth was driven by an expansion of the bank’s customer base and increased sales of wealth management products, reinforcing HSBC’s position as a leading player in the global financial services market. Meanwhile, the global banking and markets division posted a 27% surge in profits, reaching $7.1 billion.
As part of its capital return program, HSBC has declared a fourth interim dividend of $0.36 per share, bringing total dividends for the year to $0.87 per share. This includes a special dividend of $0.21 per share, following the bank’s sale of its Canadian operations—a move that aligns with its broader strategy of focusing on high-growth regions.
Since stepping into the CEO role, Elhedery has demonstrated a willingness to make decisive changes. He has overhauled HSBC’s senior leadership team, reorganized business divisions along East-West lines, and significantly downsized the bank’s mergers-and-acquisitions and equity capital markets teams in Europe and the Americas. These moves signal a clear pivot toward Asia, reinforcing HSBC’s strategic commitment to the region.
As the bank enters a new phase under Elhedery’s leadership, its ability to balance cost efficiency with growth ambitions will be closely watched by investors and analysts alike. The coming years will test the effectiveness of HSBC’s transformation strategy in an increasingly unpredictable global financial landscape.
