HSBC bank logo on the wall outside a branch in Mexico City, Mexico, June 14, 2024.
Henry Romero | Reuters
HSBC, Europe’s largest financial institution, on Wednesday reported full-year pre-tax profits of $29.91 billion, beating analysts’ expectations, on strong performance from its wealth division and Hong Kong business.
Although full-year profits fell 7.4%, HSBC’s revenue rose 4% year-on-year, both beating expectations.
Below is a comparison of HSBC’s full-year results and the bank’s consensus forecasts.
Pre-tax profit: $29.91 billion vs. $28.86 billion Revenue: $68.27 billion vs. $67.36 billion
The company’s pretax profit rose to $6.8 billion in the fourth quarter, an increase of $4.5 billion from the same period last year. This was primarily due to strong performance in one-time items related to business sales. Operating expenses increased 8% to $9.3 billion, reflecting restructuring charges, technology investments and higher performance-related compensation.
In the final quarter, sales rose 42% from a year earlier to $16.4 billion.
HSBC Group CEO Georges Erkederi said in a statement that 2025 was a year of “decisive action and swift execution” with all four of the bank’s businesses performing well and gaining momentum.
The company currently aims to achieve a return on average tangible equity (a measure of profitability) of at least 17% between 2026 and 2028, excluding notable items. RoTE in 2025 was 13.3%.
The result comes close to HSBC’s completion of the privatization of Hang Seng Bank on January 26, which was followed by the delisting of Hang Seng Bank’s shares from the Hong Kong Stock Exchange.
HSBC said last year that the deal would be profitable for the company and a better use of capital than a share buyback.
“We do expect revenue and cost synergies between the two brands, but we expect them to materialize gradually over the medium term,” said Morningstar equity analyst Kathy Chan.
In October last year, Elhederi said the proposed take-private offering was “an exciting opportunity to grow both Hang Seng and HSBC,” adding that the bank would invest to strengthen its capabilities while maintaining the Hang Seng brand.
In response to a question from CNBC’s Emily Tan about possible job cuts, Elhederi said HSBC is aiming to cut staff costs by about 8%, but stressed that the bank has not set a specific job reduction target.
He said the focus was on significantly simplifying the group and eliminating duplicate roles, noting that deduplication would result in a net 15% reduction in managing director positions.
Earlier this month, Bloomberg reported that HSBC plans to give some bankers minimal or no bonuses as it moves to a more stringent, performance-based compensation model in line with its Wall Street peers.
The bank intends to use upcoming bonus rounds to purge underperformers in areas such as investment banking and wealth management, which could include managing directors, the report said, citing people familiar with the matter.
HSBC has not confirmed a final decision on its plan to retrench underperformers, but Morningstar’s Chan said he would not be surprised to see further job cuts given the group’s broader goals to improve operational efficiency and reduce costs.
HSBC’s Hong Kong-listed shares fell 0.46%.
—CNBC’s Emily Tan contributed to this report.
