HSBC has announced a strategic reorganization plan led by CEO Georges Elhedery, aiming for $1.5 billion in annual savings by 2026 while projecting profit growth for 2024. The bank reported a pre-tax profit of $32.3 billion, exceeding forecasts. Focusing on Asia and the Middle East, HSBC plans to modernize operations and invest in technology. However, the restructuring may lead to layoffs, particularly in investment banking, as the bank seeks to maintain a highly skilled workforce amid uncertain interest rates.
HSBC’s Ambitious Reorganization Plan
The prominent British banking institution, HSBC, unveiled on Wednesday its strategic reorganization plan, spearheaded by new CEO Georges Elhedery, which aims to yield annual savings of $1.5 billion by the conclusion of 2026. Alongside this initiative, the bank also projected an impressive annual profit growth for 2024.
In a document submitted to the Hong Kong Stock Exchange, HSBC indicated that the financial benefits stemming from this restructuring process are anticipated to reach $0.3 billion in 2025, escalating to $1.5 billion annually by 2026. This move is part of a broader strategy to enhance operational efficiency and streamline the bank’s international structure, which Elhedery began implementing shortly after assuming the CEO position in September.
Strong Financial Performance and Future Focus
As a result of this reorganization, HSBC reported a pre-tax profit for 2024 that surpassed analysts’ forecasts, amounting to $32.3 billion—a $2 billion increase compared to the previous year. Meanwhile, the net profit also saw a 2% rise, reaching $22.9 billion for the same period. Following the announcement of these promising results, HSBC’s shares rose by over 1% on the Hong Kong Stock Exchange.
Elhedery emphasized the bank’s robust performance in 2024 as a solid financial foundation to propel future growth. The bank’s revenue is primarily generated from its operations in Asia, where it was established in the 19th century, and it has been progressively shifting its focus back to this region.
At the end of January, HSBC reiterated its commitment to concentrate its investment banking efforts in Asia and the Middle East, prioritizing these markets over Europe and the United States. Elhedery elaborated on this strategy, highlighting plans for a comprehensive transformation of operations, modernization of infrastructure, and significant investments in advanced technologies, including AI and data analytics.
While HSBC regards both Great Britain and Hong Kong as its “home markets,” balancing these interests can pose challenges. In 2023, former CEO Noel Quinn dismissed the notion of divesting assets in Asia, emphasizing the region’s importance for growth, which is projected at approximately 5% for China this year as it transitions to a “consumption and innovation-driven” economic model.
On the topic of interest rate fluctuations, Elhedery noted that they “remain volatile and uncertain,” particularly in the medium term. Additionally, reports indicate that the restructuring process has led to confirmed layoffs within the bank’s markets division, with further implications for investment banking expected imminently. Elhedery has stated that he is building a smaller, highly skilled core team, although specific details regarding the layoffs have not been disclosed.