HSBC Unveils $2B Share Buyback After 6.5% Profit Rise

Prime Highlights:

Pre-tax profit rose by 6.5% to $32.31 billion for 2024, slightly missing analyst expectations of $32.63 billion.

Annual revenue decreased to $65.85 billion, down from $66.1 billion in 2023.

Pre-tax profit nearly doubled to $2.3 billion, while quarterly revenue fell 11% to $2.3 billion.

Key Background:

HSBC, Europe’s largest lender, revealed a share buyback program worth up to $2 billion, reflecting its strong financial performance despite marginally missing analyst expectations for its annual results. The bank’s pre-tax profit for 2024 surged by 6.5%, reaching $32.31 billion, although it slightly fell short of the $32.63 billion forecast by analysts. HSBC also reported annual revenue of $65.85 billion, a slight decline from the previous year’s $66.1 billion.

Despite missing the revenue and profit estimates from LSEG, HSBC’s results were an improvement over the bank’s own consensus forecast of $31.67 billion. In the fourth quarter, the bank’s pre-tax profit nearly doubled from a year earlier, reaching $2.3 billion, as it overcame a significant impairment charge of $3 billion from the previous year. However, revenue for the quarter dropped by 11% to $2.3 billion.

As part of its strategy to return value to shareholders, HSBC plans to complete the $2 billion share buyback by the end of the first quarter of 2025. The buyback is in line with market expectations, and the bank also aims to reduce costs by $1.5 billion annually by 2026. Furthermore, HSBC forecasted a slight decline in net interest income for 2025, projecting $42 billion, down from $43.7 billion in 2024.

These results represent the first full-year performance report under Georges Elhedery, who assumed the role of CEO in July 2024, succeeding Noel Quinn. Following the earnings release, HSBC’s Hong Kong-listed shares dipped by 0.29%. The bank also recently announced significant restructuring efforts, which include cutting about 40 investment banking jobs in Hong Kong, particularly in sectors such as M&A, real estate, and resources. Additionally, HSBC’s restructuring is expected to lead to $300 million in cost savings in 2025. HSBC remains focused on refining its strategy with a simplified, more agile organizational structure.