Georges Elhedery

This comes as the bank details the impact of Group CEO Georges Elhedery’s restructuring. The bank also aims to redeploy $1.5bn from non-strategic activities to areas of competitive advantage, anticipating $1.8bn (c. £1.4bn) in upfront costs, including severance, in 2025 and 2026.

These figures were revealed in HSBC’s full-year earnings report, which showed a pre-tax profit of $2.3bn (£1.8bn) for the final quarter of 2024, up $1.3bn year-on-year.

Mr Elhedery, who took over as chief executive in September, has initiated a radical restructuring, including dividing operations into “eastern” and “western” units, streamlining the investment banking business, and merging two main units, resulting in a reduction of senior banking roles.

He emphasised a “smaller, core team of exceptionally talented leaders” focused on cost and capital management. His proposed pay package could reach £15.3m, potentially rising to £19.8m if the bank’s share price increases by 50%. The total bonus pool remains at $3.8bn (c. £3bn), to be shared among fewer bankers.

The restructuring prioritises key areas like UK and Hong Kong operations and the wealth business, simplifying the bank’s “complex matrix governance structure”. Investment will be directed towards wealth management, transaction banking, UK small and medium-sized businesses, and artificial intelligence. Mr Elhedery acknowledged HSBC’s underperformance in UK business banking and aims to “catch up”.

HSBC’s Hong Kong-listed shares closed higher on Wednesday but dipped in early London trading. The bank has begun the search for a new chair to succeed Mark Tucker, whose tenure ends in October 2026.

For the full year, pre-tax profit rose 6.6% to $32.3bn (c. £25.8bn), exceeding analyst expectations. A fourth interim dividend of 36 cents per share was announced, bringing the 2024 total to 87 cents, along with a planned $2bn share buyback.

HSBC has revised its net-zero emissions target for operations and supply chain to 2050, citing increasing data centre pollution and AI service investments by tech suppliers. The net interest margin decreased by 10 basis points to 1.56%. Net interest income was $32.7bn (£26.1bn) for the year, down from $35.8bn (c. £28.6bn) a year ago.

The bank reported $4.6bn (c. £3.7bn) in defaulted commercial real estate loans to Hong Kong borrowers, excluding mainland China, up significantly from $576m (£460m) a year earlier. Mr Elhedery expressed a positive outlook on the Hong Kong commercial real estate market. Provisions for bad loans reached $3.4bn (c. £2.7bn), exceeding analyst forecasts.

Full-time equivalent staff numbers fell by over 9,500 to 211,304 due to business sales. Costs increased 3% to $33bn (c. £26.4bn) due to inflation and technology investment. Return on tangible equity was 14.6%. Investment banking revenues for 2024 were just over $1bn (c. £800m). HSBC is exiting mergers and acquisitions advisory and equity capital markets businesses outside Asia and the Middle East.