HSBC profits soar to £25.6 billion ... and it now plans to make huge cuts

HSBC is targeting savings of 1.5 billion US dollars (£1.2 billion) by the end of 2026, the firm announced.

The UK’s largest bank confirmed its plans to make cost reductions as it revealed a pre-tax profit of 32.3 billion dollars (£25.6 billion) for 2024 on Wednesday in its annual results. That figure was up from 30.3 billion dollars (£24.1 billion) in 2023.

The bank has undergone significant change in recent months under the leadership of chief executive Georges Elhedery, who has spearheaded an overhaul of its global structure as part of plans to drastically reduce costs and focus on more profitable parts of the business.

The announcement said the company’s reorganisation aims to generate cost reductions of 0.3 billion dollars (£0.24 billion) in 2025 with the commitment to the 1.5 billion dollars (£1.2 billion) annualised reduction in the cost base expected by the end of 2026.

To achieve the reduction, the bank said it planned to incur 1.8 billion dollars (£1.4 billion) in severance and other up-front costs over the next two years, as well as redeploying around 1.5 billion dollars (£1.2 billion) from “non-strategic activities” to areas where it has “a clear competitive advantage”.

Mr Elhedery said: “Our strong 2024 performance provides firm financial foundations upon which to build for the future, as we prioritise delivering sustainable strategic growth and the best outcomes for our customers.

“I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy. We are creating a simple, more agile, focused bank built on our core strengths.”

He continued: “I have put in place a smaller, core team of exceptionally talented leaders driven by a growth orientated mindset and a firm focus on dynamically managing our costs and capital.

“We are embedding this approach across the organisation to ensure we are continually focused on these two important principles.”

Profit after tax increased by 0.4 billion dollars (£0.3 billion) to 25 billion dollars (£19.8 billion).

Reported profit before tax rose by 1.3 billion dollars (£1 billion) to 2.3 billion US dollars (£1.8 billion) in the final quarter of 2024, compared with the same period 12 months earlier.

Revenue throughout the year remained stable at 65.9 billion dollars (£52.2 billion) while operating expenses rose by one billion dollars (£0.8 billion).