HSBC Reports Strong Profits Amid Restructuring Efforts

HSBC, the largest bank in Europe, announced on Wednesday that its pre-tax profits for the year reached $29.91 billion, surpassing analysts’ expectations. This growth was largely driven by its wealth division and operations in Hong Kong.

While profits did decline by 7.4% compared to the previous year, the bank’s revenue increased by 4%, which was also above expectations.

• Pre-tax profit: $29.91 billion vs. $28.86 billion
• Revenue: $68.27 billion vs. $67.36 billion

In the fourth quarter alone, HSBC’s pre-tax profit jumped to $6.8 billion, up $4.5 billion from the same quarter last year, fueled by one-time gains associated with business sales. However, operating expenses rose by 8%, totaling $9.3 billion, mainly due to restructuring, tech investments, and increased performance-based pay.

Sales during the last quarter soared 42% year-on-year, reaching $16.4 billion.

Georges Erkederi, the Group CEO of HSBC, remarked that 2025 would be a year marked by “decisive action and swift execution,” highlighting strong performance across all bank divisions.

The bank aims for a return on tangible equity of at least 17% between 2026 and 2028, excluding certain items. The return on tangible equity in 2025 was recorded at 13.3%.

This announcement coincides with HSBC’s nearing completion of the privatization of Hang Seng Bank, which occurred on January 26, leading to the delisting of its shares from the Hong Kong Stock Exchange. The bank previously stated that this move was intended to enhance revenue and was seen as a more efficient use of capital compared to stock buybacks.

Morningstar analyst Kathy Chan mentioned that while synergies between the two banks were anticipated, they would take time to fully realize.

Previously, Elhederi described the privatization as a promising chance to develop both Hang Seng and HSBC, promising investments to bolster capabilities while maintaining the Hang Seng brand.

When asked about potential job cuts, Elhederi indicated that HSBC plans to reduce staff expenses by around 8%, though he did not set a specific goal for job reductions. He emphasized the need to streamline operations and eliminate duplicate positions, suggesting a 15% decrease in managing director roles.

At the start of the month, it was reported that HSBC would be giving minimal or no bonuses to some bankers as they shift to a more rigorous performance-oriented pay structure, aligning with trends seen among Wall Street banks.

Reports indicated that the bank was likely to use upcoming bonus decisions to eliminate underperformers in areas like investment banking and wealth management, although HSBC has yet to confirm this plan. Chan noted that more job cuts wouldn’t be unexpected given the bank’s overall objective to enhance operational efficiency and cut costs.

Following the announcement, HSBC’s shares in Hong Kong saw a slight decline of 0.46%.