HSBC targets $1.5 bn in annual cost savings after revamp / Photo: © AFP
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HSBC targets $1.5 bn in annual cost savings after revamp
Banking giant HSBC said Wednesday that CEO Georges Elhedery's plan since October to simplify the company's structure and geographic setup will yield $1.5 billion in annual cost savings by the end of 2026.
"Our cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate approximately $0.3 billion of cost reductions in 2025, with a commitment to an annualised reduction of $1.5 billion in our cost base expected by the end of 2026," the London-headquartered bank said in an exchange filing.
Elhedery's plan for a "simpler, more dynamic, and agile organisation" has shaken up Europe's largest bank, whose shares in Hong Kong have rallied to an 11-year high.
HSBC on Wednesday said pre-tax profits rose six percent to $32.3 billion in 2024, while profit attributable to shareholders edged up two percent to $22.9 billion.
"Our strong 2024 performance provides firm financial foundations upon which to build for the future," Elhedery said in the earnings statement.
HSBC generates most of its revenue in Asia and has spent several years pivoting to the region, vowing to develop its wealth business and target fast-growing markets.
Days after Elhedery became CEO, the lender said it would simplify its structure and split into four parts: Hong Kong, UK, "corporate and institutional banking" plus "international wealth and premier banking".
The bank will also streamline its geographical set-up by bringing together its Asia-Pacific and Middle East regions, while uniting its European and US operations.
Elhedery has moved to trim a layer of senior bankers, with hundreds of managers reportedly told to reapply for their jobs.
Cuts are under way in HSBC's markets division and wider layoffs at its investment bank will start as early as this week, Bloomberg News reported.
The bank said last month it would wind down parts of its investment banking operations in Europe, the United Kingdom and the Americas.
HSBC aims to complete the restructuring by June, according to Bloomberg.
The lender considers both Britain and Hong Kong its "home markets", though the balancing act has come under pressure as relations sour between China and the West.
Elhedery's predecessor in 2023 fended off a call for HSBC to spin off its Asia assets.
C.Koch--VB