On a Wednesday in February, Europe's largest lender, HSBC, reported that its full-year pre-tax profit had reached $32.31 billion, a rise of 6.5%, and promised to return up to $2 billion to shareholders through share buybacks. The gain was helped by the sale of its Canadian banking business, a reminder that some of the strongest numbers in a long story are carried by decisions to let go of part of what one once held. The result landed just beneath what analysts had hoped for, and it stands as the first full-year accounting under Georges Elhedery, the chief executive now steering a bank that is
HSBC Announces Up to $2 Billion Buyback as Annual Pre-Tax Profit Rises 6.5%
A $3 billion charge a year ago made this quarter's near-doubling easier
Mark
The headline says profit rose 6.5%, but the profit also missed estimates. How do those fit together?
Mimi
Both are true. Profit of $32.31 billion was up from the prior year, helped by the sale of the Canadian banking business, but analysts at LSEG had expected $32.63 billion.
Luke
And the bank's own consensus was lower, $31.67 billion. So whether it's a miss or a beat depends on whose estimate you pick.
Mark
What about the fourth quarter, where profit nearly doubled?
Mimi
That's partly a base effect. A year earlier the bank took a $3 billion impairment charge, so the comparison is easy.
Luke
Worth noting revenue in that quarter fell 11%. Doubling profit and falling revenue in the same quarter tells you the charge, not growth, drives the swing.
Mark
Why does the cost-cutting matter so much?
Mimi
Revenue slipped slightly and the bank expects net interest income to fall from $43.7 billion to $42 billion. Trimming $1.5 billion annualized by end-2026 is how it offsets that.
Luke
That's the bank's target, though. The reporting doesn't tell us how it will be achieved beyond the $300 million from the reorganization.
Mark
And the Hong Kong layoffs?
Mimi
About 40 investment bankers were let go on Tuesday, according to Reuters, mainly in M&A, consumer, real estate and resources and energy.
Luke
That's a Reuters report, not something HSBC confirmed in this piece, and it isn't explicitly tied to the cost program. I'd keep those two things separate.
El Pulso
- Profit rose 6.5% to $32.31 billion, yet slipped just short of the $32.63 billion analysts had forecast.
- Revenue fell to $65.85 billion, and the fourth quarter's revenue dropped 11% even as profit nearly doubled against a year marked by a $3 billion impairment.
- Roughly 40 investment bankers in Hong Kong were dismissed the day before results, a visible cut in the restructuring's human cost.
- Elhedery is reorganizing the bank into four units and cutting $1.5 billion in annualized costs by end-2026, with the $2 billion buyback set to finish by March 2025.
- Forward signals are mixed, as net interest income is forecast to ease to $42 billion from $43.7 billion, and shares dipped slightly after the release.
On a Wednesday in February, Europe's largest lender, HSBC, reported that its full-year pre-tax profit had reached $32.31 billion, a rise of 6.5%, and promised to return up to $2 billion to shareholders through share buybacks. The gain was helped by the sale of its Canadian banking business, a reminder that some of the strongest numbers in a long story are carried by decisions to let go of part of what one once held. The result landed just beneath what analysts had hoped for, and it stands as the first full-year accounting under Georges Elhedery, the chief executive now steering a bank that is trying to become simpler, leaner, and more focused.
HSBC, Europe's largest lender, reported that its pre-tax profit for the full year reached $32.31 billion, up 6.5%, and announced it would buy back up to $2 billion of its own shares. Much of the lift came from selling its banking business in Canada, which means the headline growth owes as much to subtraction as to expansion.
The number still fell just short of the $32.63 billion analysts had expected, though it cleared the bank's own internal consensus of $31.67 billion. Revenue slipped to $65.85 billion. The fourth quarter looked strong on paper, with profit nearly doubling, but that comparison rests on a weak base after a large impairment the year before. Quarterly revenue fell 11%.
These were the first full-year results under Georges Elhedery, who took over as chief executive last July. He is reshaping the bank into four clearer businesses, with a plan to cut $1.5 billion in annualized costs by the end of 2026. Analyst Michael Makdad at Morningstar judged the buyback in line with expectations and the cost plans a positive step.
The restructuring has a human edge. A day before the results, about 40 investment bankers in Hong Kong were let go, with mergers and acquisitions, consumer, real estate, and resources and energy hit hardest. Looking ahead, the bank expects its net interest income to ease to $42 billion this year from $43.7 billion, so the coming months will test whether the leaner structure can offset softer lending income.
HSBC, Europe's largest lender, reported on Wednesday that its pre-tax profit for the full year came to $32.31 billion, a rise of 6.5%, and said it would buy back up to $2 billion of its own shares. The sale of its banking business in Canada helped lift the result.
The figure landed just short of what analysts had expected. The mean estimate compiled by LSEG was $32.63 billion. It did, however, come in above the $31.67 billion consensus that the bank compiled itself. Revenue told a similar story: $65.85 billion for the year, down from $66.1 billion in 2023 and below the LSEG estimate of $66.52 billion.
The fourth quarter was more uneven. Pre-tax profit nearly doubled from a year earlier to $2.3 billion, but the comparison is flattering: in the final quarter of 2023 the bank took a $3 billion impairment charge that dragged down its performance. Revenue for the quarter fell 11% to $2.3 billion.
HSBC said it expects to finish the $2 billion buyback by the end of the first quarter of 2025. Michael Makdad, an equity research analyst at Morningstar, said the buyback was in line with what the market expected. He also called the bank's plans to trim costs over 2025 and 2026 a positive. HSBC said it would cut annualized costs by $1.5 billion by the end of 2026.
The outlook for lending income is softer. The bank forecast banking net interest income of $42 billion in 2025, compared with $43.7 billion in 2024. Hong Kong-listed shares dipped 0.29% after the results were released.
These were the first full-year results under Georges Elhedery, who became chief executive in July last year after Noel Quinn retired. The London-headquartered bank has been restructuring under him. Last October it announced plans to reorganize into four units, splitting operations into an "Eastern markets" division and a "Western markets" division. HSBC said that reorganization will produce about $300 million in cost reductions in 2025.
Elhedery described the aim in the bank's statement: a simple, more agile, focused bank built on its core strengths, with four complementary, clearly differentiated businesses, a structure aligned to strategy, and a portfolio reshaped "at pace and with purpose."
The human cost of that reshaping surfaced a day before the results. On Tuesday, Reuters reported, HSBC dismissed about 40 investment bankers in Hong Kong. The areas reportedly hit hardest were mergers and acquisitions, consumer, real estate, and resources and energy.
The next markers are the buyback's completion by the end of March and the progress of the $1.5 billion cost-cutting program through 2026, set against a lower net interest income forecast for this year.
Citas Notables
HSBC is creating a simple, more agile, focused bank built on its core strengths, with four complementary, clearly differentiated businesses.— Georges Elhedery, HSBC CEO
The buyback is in line with market expectations, and the cost-trimming plans for 2025 and 2026 are a positive.— Michael Makdad, Morningstar equity research analyst (paraphrased)
Quieres la nota completa?
Lee el original en CNBC ↗
Business