HSBC, Europe’s largest lender, has announced a share buyback program worth up to $2 billion, set to be completed by the end of the first quarter of 2025. This move comes as the bank reported a 6.5% increase in its annual pre-tax profit, largely supported by the sale of its Canadian banking business.
2024 Financial Performance
For the full year 2024, HSBC’s revenue stood at $65.85 billion, falling slightly short of the $66.52 billion forecast by analysts compiled by LSEG. Pre-tax profit for the year reached $32.31 billion, narrowly missing the $32.63 billion estimated by analysts but surpassing the $31.67 billion internal consensus compiled by the bank.
In the fourth quarter, the bank’s pre-tax profit nearly doubled to $2.3 billion compared to the same period last year, when it faced a $3 billion impairment charge that weighed on performance. However, quarterly revenue fell by 11%, totaling $2.3 billion.
Cost-Cutting and Reorganization Plans
HSBC also unveiled ambitious plans to reduce costs by an annualized $1.5 billion by the end of 2026. As part of this strategy, the bank is undergoing a significant reorganization. It has separated its operations into two major divisions: “Eastern markets” and “Western markets.” This restructuring is expected to generate $300 million in cost reductions in 2025 alone.
CEO Georges Elhedery, who took over in July 2024, emphasized the bank’s focus on creating a “simple, more agile, focused bank built on our core strengths.” Elhedery sees the reorganization as a critical step in reshaping HSBC’s portfolio, aligning its structure with its strategy.
Outlook for 2025 and Challenges
Despite the positive profit growth, HSBC forecasted banking net interest income of $42 billion for 2025, slightly lower than the $43.7 billion achieved in 2024. The bank is also facing challenges from the global economic environment, including reduced demand in certain sectors.
On Tuesday, HSBC reportedly laid off 40 investment bankers in Hong Kong, targeting sectors such as mergers and acquisitions (M&A), consumer, real estate, and energy. These layoffs are part of the bank’s ongoing efforts to streamline its workforce and focus on cost-efficiency.
Market Reaction
Following the earnings release, HSBC’s Hong Kong-listed shares dipped 0.29%. While the share buyback announcement aligns with market expectations, analysts view the bank’s cost-cutting measures and restructuring plans as a positive step toward long-term sustainability.
Michael Makdad, an equity research analyst at Morningstar, commented, “The $2 billion buyback is in line with market expectations, and the cost-trimming efforts over the next two years are a welcome move.”
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