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HSBC unveiled a goal of saving $300mn this year and cutting $1.5bn from its cost base by the end of next year as it reported a rise in profits in the fourth quarter.
The bank said on Wednesday it made a pre-tax profit of $2.3bn in the final three months of last year, in a full-year earnings report that shed light on the impact of chief executive Georges Elhedery’s sweeping overhaul since he took the top job in September.
The changes include redrawing HSBC’s operations into eastern and western units, closing key parts of its investment banking business and merging two of its three main units. In the process, it is axing an expensive layer of senior bankers.
HSBC said it expected the overhaul to trigger $1.8bn in upfront costs, including severance, in 2025 and 2026. It would aim to redeploy about $1.5bn from “non-strategic activities” to areas where it had a competitive advantage, it added.
“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 look to the future with confidence and clarity of purpose,” said Elhedery.
The bank’s pre-tax profit for the year to December rose to $32.3bn, beating analysts’ estimates of $31.7bn.
HSBC unveiled a fourth interim dividend of 36 cents a share, taking the 2024 total to 87 cents, and said it planned a $2bn share buyback, the latest of a series in recent years.
Costs at the bank rose 3 per cent to $33bn, due partly to inflation and investment in technology, said the bank.
Its net interest margin, a crucial measure of lending profitability, fell by 10 basis points to 1.56 per cent.
The margin — the difference between the interest the bank receives from making loans and the rate it pays out to depositors — rose alongside interest rates in recent years but started falling last year, a sign that the boost from rising rates has tailed off.
That puts the bank under pressure to cut costs and boost income in areas less dependent on higher rates.
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