HSBC Launches $1.8B Restructuring Plan to Cut Costs and Boost Returns

HSBC reported a better-than-expected 2024 pre-tax profit of $32.3 billion—up from $30.3 billion a year earlier—while unveiling a costly restructuring plan to bolster long-term profitability. Under new CEO Georges Elhedery, the Asia-focused bank aims to reduce expenses by $1.5 billion annually by the end of 2026, but it will incur about $1.8 billion in charges to achieve these workforce and operational cuts. Simultaneously, HSBC announced a fresh $2 billion share buyback to be completed before its next earnings release, though analysts note that heavier-than-anticipated revamp costs could limit future share repurchase potential.

HSBC’s leadership attributes the overhaul to diverging global interest rate trajectories and geopolitical headwinds that demand a leaner, more agile approach—particularly across its wholesale businesses and core banking units. Despite this major restructuring, management reaffirmed a mid-teens return on tangible equity (RoTE) goal through 2027, reinforcing confidence in the bank’s ability to navigate choppy markets. Some cost savings are expected to come from consolidation of overlapping roles, particularly in investment banking support functions.

Although the profit bump and share buyback met with initial optimism, HSBC’s stock performance remained muted amid concerns about restructuring expenses. CEO Elhedery conceded that the bank’s pursuit of cost efficiency involves tough decisions, such as duplicative role eliminations. Still, by sharpening its focus on Asia and streamlining operations worldwide, HSBC hopes to sustain solid earnings momentum in the face of economic uncertainty.