HSBC Reports Mixed Q4: Plans Cost Cuts, Targets $42 Billion Banking NII In 2025

HSBC Holdings, Plc. HSBC reported fourth-quarter results today, with revenue decreasing 8% year over year to $11.6 billion.

Revenue was down due to the recycling of foreign currency losses and other reserves relating to the sale of its business in Argentina.

Constant currency revenue, excluding notable items, increased by $1.2 billion to $16.5 billion.

Revenue benefitted from growth in Banking net interest income (NII) to $11.0 billion (vs $10.0 billion prior year) in the quarter.

Customer loans stood at $931 billion, and deposits came in at $1.7 trillion.

The bank reported FY24 revenue of $65.9 billion (broadly flat Y/Y) and profit before tax rose 6% to $32.3 billion.

CET1 ratio was 14.9% at the end of the year vs. 14.8% in 2023.

The company’s credit losses and other credit impairment charges stood at $1.4 billion in fourth-quarter and $3.4 billion in 2024.

HSBC disclosed a new $2 billion share buyback, which it plans to complete before the first-quarter’s results in April.

Outlook: For FY25, HSBC targets banking NII of around $42 billion and mid-teens return on average tangible equity in each of the three years from 2025 to 2027.

The bank aims to target cost factors in savings from the reorganization, expecting $0.3 billion in reductions in 2025 and an annualized $1.5 billion cut by the end of 2026. 

HSBC says that achieving this will require $1.8 billion in severance and other upfront costs over 2025-2026. 

It plans to reallocate $1.5 billion from non-strategic areas to high-return opportunities. 

Price Action: HSBC shares are down 0.13% at $56.81 at the last check Wednesday.

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