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HSBC has announced its target to save $300 million this year and cut $1.5 billion from its annual cost base by the end of next year.
The bank said Wednesday it aims to redeploy around $1.5 billion from “non-strategic activities” to areas with a competitive advantage. Actions were expected to cause $1.8 billion in advance costs, including retirement, in 2025 and 2026.
HSBC provided figures in its full-year revenue report. This was an increase of $1.3 billion in pre-tax profits in the last three months of last year, up $1.3 billion in last year's figures.
Since becoming CEO in September, Elhedery has embarked on a dramatic restructuring of its UK-based bank. The changes include redrawing into HSBC's “Eastern” and “Western” units, closing key parts of investment banking operations and merging two of the three main units. In the process, it is x the expensive class of senior bankers.
“I have introduced a small, core team of extremely talented leaders that focus on growth-oriented thinking and dynamic management of costs and capital. We are confident and confident. We look to the future with clarity of our purpose,” Elhedaly said.
HSBC's Hong Kong-listed stocks rose 1.3% on Wednesday, but then cut profits that rose 0.7%.
The report set the proposed pay package worth up to £15.3 million for Elhedery, worth up to £15.3 million, if the bank's share price rises 50%. The bank has consistently held its 2024 bonus pool total at $3.8 billion.
The number of full-time equivalent staff fell more than 9,500 last year, partly due to sales of HSBC units, including Canada, France and Argentina.
Pre-tax profit for the year ended December rose 6.6% to $32.3 billion, with analysts' estimates of $31.7 billion.
HSBC announced its fourth provisional dividend of 36 cents per share, bringing the total to 2024 to 87 cents and said it planned its latest series, the stock buyback.
The bank said costs increased 3% to $33 billion, partly due to inflation and investments in technology.
Its net interest margin, an important measure of lending profitability, fell 10 basis points to 1.56%.
The margins – the difference between the interest received from banks receiving loans and the interest paid to depositors – have risen alongside interest rates in recent years, but are indications that the rise from the rising interest rates have been ousted last year.
This puts banks under pressure to cut costs and increase revenues in areas that do not rely on higher rates. Net interest income, which accounts for more than half of total revenue, was $32.7 billion for the full year, from $35.8 billion a year ago.
It has acquired the $3.4 billion bad debt provisions that more than $3.1 billion analysts had expected.
The bank reported just over $1 billion in investment bank revenues in 2024. That's just $65.9 billion in total revenue. Last month, HSBC said it was closing companies in mergers and equity capital markets outside Asia and the Middle East.
The profit margin for tangible fairness, a measure of profitability, was 14.6%, in line with previous year's figures.
