Table of Contents
- 1. HSBC Reports Strong Profits, Launches $2 Billion Share Buyback
- 2. Financial Highlights
- 3. Share Buyback and cost-Cutting Measures
- 4. Future Outlook
- 5. Restructuring Under New Leadership
- 6. Organizational Changes
- 7. Moving Forward
- 8. How does HSBC plan to navigate the increasingly digital landscape and stay ahead of the curve?
- 9. Archyde Exclusive: HSBC CEO Georges Elhedery on Strong Profits, Share Buyback, and Strategic Restructuring
- 10. HSBC Reports Strong Profits, Launches $2 Billion Share Buyback
- 11. Q: Let’s start with the good news – HSBC has reported a 6.5 percent rise in annual pre-tax profit. To what do you attribute this growth?
- 12. Q: The bank missed LSEG’s revenue estimates, yet pre-tax profit exceeded consensus. How do you explain this apparent discrepancy?
- 13. Q: Speaking of costs, HSBC is predicting annualized cost reductions of $1.5 billion by the end of 2026.Can you tell us more about these cuts?
- 14. Q: Following your appointment as CEO, you led a major restructuring of HSBC. How is this reshaping the bank’s operations and what more can we expect?
- 15. Q: Lastly, hong Kong-listed shares dipped upon the earnings release. How do you reassure shareholders about the bank’s long-term prospects?
- 16. Q: Looking ahead,what’s one challenge you foresee for HSBC and how do you plan to tackle it?
- 17. Q: How can HSBC’s customers and stakeholders engage with this transformation and support HSBC’s continued success?
EuropeS largest lender, HSBC, announced a share buyback of up to $2 billion Wednesday amidst a 6.5% rise in it’s annual pre-tax profit. The boost was driven, in part, by the sale of its banking business in Canada.
Financial Highlights
For the full year,HSBC reported revenue of $65.85 billion, a slight decrease from $66.1 billion in 2023. Here’s a breakdown of the bank’s full-year results compared to LSEG mean estimates:
- Pre-tax profit: $32.31 billion vs. $32.63 billion
- Revenue: $65.85 billion vs. $66.52 billion
While pre-tax profit narrowly missed LSEG estimates, it exceeded the $31.67 billion consensus estimate provided by the bank.
The bank’s fourth-quarter pre-tax profit nearly doubled year-over-year,reaching $2.3 billion. This marked a meaningful advancement from the $3 billion impairment charge the lender faced in the fourth quarter of the previous year, which impacted its performance.
Revenue for the reported quarter declined 11% to $2.3 billion.
HSBC expects to complete the announced share buyback by the end of the first quarter of 2025. Michael Makdad,equity research analyst at Morningstar,stated that the buyback aligns with market expectations,adding that plans to trim costs over 2025 and 2026 are a positive development.
The bank aims to achieve annualized cost reductions of $1.5 billion by the end of 2026.
Future Outlook
HSBC forecasts banking net interest income of $42 billion in 2025, compared to $43.7 billion in 2024.
Restructuring Under New Leadership
These are HSBC’s first full-year results since Georges Elhedery assumed the role of CEO in July 2024, succeeding Noel Quinn.
Hong kong-listed shares dipped by 0.29% following the earnings release.
Organizational Changes
HSBC has initiated a major restructuring under Elhedery’s leadership. On Tuesday, the bank dismissed approximately 40 investment bankers in Hong Kong, according to Reuters. The sectors most affected are M&A,consumer,real estate,and resources and energy.
Last October, the bank announced plans to reorganize its business into four units, separating its operations into “Eastern markets” and “Western markets” divisions.
“We are creating a simple, more agile, focused bank built on our core strengths … This includes creating four complementary, clearly differentiated businesses, aligning our structure to our strategy and reshaping our portfolio at pace and with purpose,” Elhedery said.
the bank estimates that this reorganization will generate approximately $300 million in cost reductions in 2025.
Moving Forward
HSBC’s recent performance highlights its commitment to adapting to evolving market conditions and driving profitability.The share buyback and cost-cutting measures demonstrate a clear focus on shareholder value, while the strategic restructuring positions the bank for future growth and success.
EuropeS largest lender, HSBC, has announced a share buyback of up to $2 billion amidst a 6.5 percent rise in its annual pre-tax profit. George Elhedery, CEO of HSBC, sits down with Archyde to discuss these developments and more.
Q: Let’s start with the good news – HSBC has reported a 6.5 percent rise in annual pre-tax profit. To what do you attribute this growth?
Georges Elhedery: We’ve seen a robust performance across various areas, but the sale of our banking business in Canada was a important contributing factor. The proceeds allowed us to strengthen our capital position and focus on our core markets.
Q: The bank missed LSEG’s revenue estimates, yet pre-tax profit exceeded consensus. How do you explain this apparent discrepancy?
Elhedery: Our results reflect our strategic pivot towards a more efficiency-driven model. we’re focusing on reducing costs and improving our profit margins, which sometimes means taking a hit on revenue in the short term. The increase in profit shows that this strategy is already yielding results.
Q: Speaking of costs, HSBC is predicting annualized cost reductions of $1.5 billion by the end of 2026.Can you tell us more about these cuts?
Elhedery: As part of our strategic reorganisation, we’re streamlining our operations and creating a simpler, more agile bank. We’ve identified areas where we can reduce overheads without compromising on our service quality. These cost cuts will help us remain competitive and drive lasting growth.
Q: Following your appointment as CEO, you led a major restructuring of HSBC. How is this reshaping the bank’s operations and what more can we expect?
Elhedery: We’re transforming HSBC into four complementary, clearly differentiated businesses. This will allow us to better serve our clients in Eastern and western markets, while improving our cost efficiency. We’re making significant progress, and I expect to see further positive changes in the coming months.
Elhedery: We understand that short-term market dynamics can be volatile, but our focus remains firmly on executing our long-term strategy. We’re committed to delivering sustained value to our shareholders through our share buyback program and our ongoing efforts to improve operational efficiency and drive growth.
Q: Looking ahead,what’s one challenge you foresee for HSBC and how do you plan to tackle it?
elhedery: Navigating the increasingly digital landscape is a top priority for us. We’re investing heavily in technology to enhance our customer experience and stay ahead of the curve. By embracing digital conversion, we’ll be better positioned to serve our clients and drive our business forward.
Q: How can HSBC’s customers and stakeholders engage with this transformation and support HSBC’s continued success?
Elhedery: We encourage our customers and stakeholders to stay informed about our progress and engaged with our brand. We value their feedback and involvement as we work together to build a stronger, more innovative HSBC.
