HSBC 2024 profit rose 2% as CEO looks to trim US$1.5 billion costs by 2026

HSBC Holdings, the biggest commercial lender in Hong Kong, on Wednesday reported 2 per cent profit growth for 2024, as gains from its wealth-management business and cost savings from restructuring offset the impact of interest-rate cuts.

Net profit rose 2.2 per cent to US$22.9 billion or US$1.25 per share from US$22.4 billion a year earlier, the lender said in a Hong Kong stock exchange filing. The outcome was below the US$24.1 billion consensus among analysts tracked by Bloomberg, but was in line with an in-house consensus based on 18 analysts' estimates of US$22.67 billion.

Pre-tax profit increased 6.6 per cent to US$32.3 billion from US$30.3 billion the previous year. This was higher than market estimates of US$31.7 billion.

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HSBC also announced a new US$2 billion share buy-back programme, matching the same amount announced a year earlier. In 2023 as a whole, the bank has US$9 billion of share buy-back.

The bank will pay US$0.36 dividend per share for the final quarter of 2024, bringing the total for the year to US$0.87 versus US$0.61 in 2023.

CEO Georges Elhedery has put his stamp on the bank since taking over in September last year. Photo: Dickson Lee alt=CEO Georges Elhedery has put his stamp on the bank since taking over in September last year. Photo: Dickson Lee>

"Since becoming CEO, I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy," CEO Georges Elhedery said in the filing. "We are creating a simple, more agile, focused bank built on our core strengths."

Elhedery, who replaced Noel Quinn as CEO in September, also announced a plan to generate US$1.5 billion of cost savings by the end of 2026 as he reorganised the top echelons of the 160-year-old UK banking group.

"Our cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate around US$300 million of cost reductions in 2025, with a commitment to an annualised reduction of US$1.5 billion in our cost base by the end of 2026."

To achieve that, HSBC planned to incur severance and other upfront costs of US$1.8 billion by 2026, he added.

Elhedery also said he would redeploy US$1.5 billion from non-strategic activities to high-growth areas.

HSBC's shares rose 0.8 per cent to HK$87.85 at 2pm after the results announcement. The broader Hang Seng Index was 0.4 per cent lower.