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 today.
“Our strong 2024 performance provides firm financial foundations upon which to build for the future,” he said.
The firm said pre-tax profit rose 6% to US$32.3 billion in 2024, while profit attributable to shareholders edged up 2% to US$22.9 billion.
The London-headquartered lender also announced a share buy-back of up to US$2 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, UK, “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 US operations.
The “cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate approximately US$0.3 billion of cost reductions in 2025, with a commitment to an annualised reduction of US$1.5 billion in our cost base expected by the end of 2026”, it said today.
HSBC added that it plans to incur costs of US$1.8 billion over 2025 and 2026 to deliver the reductions.
Elhedery has moved to trim a layer of senior bankers, with hundreds of managers reportedly told to reapply for their jobs.
Cuts are under way in HSBC’s markets division and wider layoffs at its investment bank will start as early as this week, Bloomberg News reported.
The lender said last month it would wind down parts of its investment banking operations in Europe, the UK and the Americas.
Elhedery said today that his initiatives included “a comprehensive transformation of (HSBC) operations, modernising our infrastructure, and investing in technology such as AI, generative AI, data and analytics”.
The lender considers both Britain and Hong Kong its “home markets”, though the balancing act has come under pressure as relations sour between China and the West.
Elhedery’s predecessor Noel Quinn in 2023 fended off a call for HSBC to spin off its Asia assets.