AFP – Banking giant HSBC said yesterday that Chief Executive Officer (CEO) Georges Elhedery’s plan since October to simplify the company’s structure and geographic setup will yield USD1.5 billion in annual cost savings by the end of 2026.
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.
“Since becoming CEO, I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy,” Elhedery said in an earnings statement yesterday.
“Our strong 2024 performance provides firm financial foundations upon which to build for the future.”
The firm said pre-tax profit rose six per cent to USD32.3 billion in 2024, while profit attributable to shareholders edged up two percent to USD22.9 billion.
The London-headquartered lender also announced a share buy-back of up to USD2 billion to be completed by the time it announced this year’s first-quarter results. 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.
Shortly after Elhedery became CEO, the lender said it would simplify its structure and split into four parts: Hong Kong, United Kingdom, “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 United States operations.
The “cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate approximately USD0.3 billion of cost reductions in 2025, with a commitment to an annualised reduction of USD1.5 billion in our cost base expected by the end of 2026”, it said yesterday.
