HSBC: Solid Q4 and FY24 Results; Group's Reorganisation Triggers Investments & Cost Savings Targets, and a Focus on Asia

On 19 February 2025, HSBC Holdings plc (HSBC or the Group) announced its Q4 results and reported a profit before tax (PBT) of USD 2.3 billion in Q4 2024, up USD 1.5 billion year-over-year (YoY) (vs. Q4 2023) on a constant currency basis. Excluding notable items (mainly the negative impact of USD 5.2 billion on Argentina disposal), PBT was USD 7.3 billion in Q4 2024, up 10% YoY.

Similar to the prior quarter, results mainly benefitted from revenue growth in Wealth and Personal Banking and Global Banking and Markets. Banking NII, the main contributor to revenues, is trending down except for HSBC UK, thanks to hedges. For 2024, PBT was a solid USD 32.3 billion, up 6% YoY on a reported basis, and up 4% YoY excluding notable items on a constant currency basis.

We note that operating expenses increased by 3% YoY in line with the Group's cost growth targets and reflecting investments (technology) and inflation, although partly compensated by reductions related to business disposals (mainly Canada and France). The cost guidance is similar for 2025, with simplification efforts partly offsetting investments and inflation.

HSBC's CET1 ratio decreased to 14.9% at end-Q4 2024 from 15.2% at end-Q3 2024, as the contribution of profits was mainly offset by dividends and Q3 2024 buybacks (USD 3 billion). The Group announced another share buyback of up to USD 2 billion by Q1 2025 results announcement. Overall, this is in line with HSBC's guidance to manage its CET1 ratio in the 14-14.5% range in the medium term, which has been maintained.

In addition, HSBC has presented a business update and targets, including a return on average tangible equity (ROTE) in the mid-teens in 2025, 2026 and 2027 excluding notable items. In 2024, the Group's ROTE was 16.0% excluding notable items, 14.6% otherwise.

HSBC is generally planning for a simplified structure while leveraging its leading positions with a particular focus on Asia and the Middle East and wealth management, because of their growth potential. The Group provided clear cost cutting targets: USD 300 million in cost savings in 2025 and a USD 1.5 billion annualised cost base reduction by end-2026 from the Group's reorganization (largely less duplication roles and simplification of management and business matrix), as well as a reallocation over the medium term of about USD 1.5 billion of costs from non-strategic operations to areas where the Group has a competitive advantage.

Notes:
All figures are in USD unless otherwise noted.