HSBC unveils cost cuts in drive to create a 'simple, more agile, focused bank'

• HSBC's new CEO Georges Elhedery aims to save $300 million in 2025.
• The bank also plans to reduce its cost base by $1.5 billion by the end of next year.
• HSBC stock dipped on Wednesday after hitting a 20-year high on Tuesday.

HSBC unveiled further details of its cost-cutting plans alongside its annual results on Wednesday.

The bank said it aimed to save $300 million this year and reduce its cost base by $1.5 billion by the end of 2026.

The plans would result in severance and other up-front costs of $1.8 billion over the next two years.

HSBC stock hit a 20-year high in London on Tuesday, up 40% over the past 12 months and 14% this year. Shares dipped 0.8% to £8.91 on Wednesday, valuing the bank at about £160 billion ($201 billion.)

"Plans to trim personnel expense by 8% over 2025 and 2026 are positive but I don't see a lot of new eye-catching overhaul or cost cutting measures in the release," said Michael Makdad, senior equity analyst at Morningstar.

"That's not necessarily a bad thing — increasing efficiency at a bank like HSBC is a matter of many small and midsize details that have to be well coordinated."

HSBC reported annual pre-tax profits of $32.3 billion, up $2 billion on 2023 but short of estimates by LSEG analysts of $32.63 billion. Revenues were $65.85 billion, surpassing forecasts of $66.52 billion.

The results are the first under former CFO Georges Elhedery, who took over as CEO in September from Noel Quinn.

Elhedery's cost-cutting plans include simplifying HSBC's structure. Its Asia-Pacific and the Middle East will form the "eastern markets" division, while its UK, European, and Americas business will be known as the "western markets."

He also unveiled a new international wealth and premier banking unit and will reduce its investment banker headcount.

"We are creating a simple, more agile, focused bank built on our core strengths," Elhedery said in a statement. "We continue to take deliberate and decisive steps."

HSBC said it would launch a share buyback worth up to $2 billion.

Richard Hunter at Interactive Investors said: "Changing horses midstream is never an easy task, and the previously announced transformation will have upfront costs which will delay the benefits of the anticipated savings.

"On the other hand, the rationale for a more focused operation is clear and should allow the group to reap the rewards of a higher focus on profit generation, while also keeping costs in check."

UBS analysts said in a note: "With the restructuring headlines in line with pre-results press we think the key question for investors given the strength in the share year-to-date and relative complexity of the group is whether HSBC offers premium long-term growth at an attractive price."