HSBC has announced a rise in pre-tax profit to $2.3bn in Q4 as the bank also detailed plans to cut an estimated $1.5bn from its cost base before the end of next year.

Profit before tax across HSBC’s entire 2024 reached $32.3bn, a total up by $2bn on its 2023 performance, which was helped by improved revenues in its wealth and markets businesses.

HSBC has followed both Barclays and NatWest which last week posted figures ahead of expectations in their Q4 results.

In the bank’s latest trading statement, CEO, Georges Elhedery, outlined plans to redeploy $1.5bn from “non-strategic activities” to areas where it had a competitive advantage. Elhedery, who has been CEO of the bank since September last year, has overseen a restructuring of the group which includes combining some of its commercial and investment banking businesses, as well as implementing a new leadership structure.

“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.

“We continue to take deliberate and decisive steps. This includes creating four complementary, clearly differentiated businesses, aligning our structure to our strategy and reshaping our portfolio at pace and with purpose.

“I have put in place a smaller, core team of exceptionally talented leaders driven by a growth orientated mindset and a firm focus on dynamically managing our costs and capital.”

HSBC’s cost-cutting drive is expected to see an 8% cut to the global bank’s workforce in 2025, following on from a 3% cut last year that saw the global workforce shrink to 220,928, down from 227,552 in 2023.

The bank still announced plans of a fresh $2bn share buyback, which it expects to complete by its Q1 2025 results announcement.

Head of investment analysis at AJ Bell, Laith Khalaf, commented: “Given its size, HSBC is often compared to a supertanker in the sense it is not that easy to change course. However, Elhedery has belied this logic since taking over last September, announcing a major restructuring of its operations and unveiling further cost cuts alongside today’s results.

“As well as scaling back costs, the company plans to redeploy capital to the parts of its business where it really excels rather than just making up the numbers.

“An easing net interest margin shows the positive impact from higher rates is beginning to ease for HSBC and the rest of the banking industry.

“The announcement of a share buyback and a further hike in the dividend offer evidence of management’s confidence in the outlook.”

---