HSBC's Overhaul Progress: Profits Drop, but Transformation Continues
HSBC's CEO, Georges Elhedery, has announced that the bank's major restructuring is nearing completion, despite a decline in annual profits. The bank's transformation aims to create a simpler, more agile entity, better suited for a rapidly changing global economy.
Despite facing a challenging year with $4.9 billion in one-time charges, HSBC's pre-tax profit fell by 7% to $29.9 billion. This result still exceeded City analysts' expectations, following a strong performance in 2024. HSBC has set an ambitious target of achieving a 17% return on tangible equity by 2028, up from its previous mid-teens goal for 2027.
The bank's Hong Kong-listed shares responded positively, rising by 2.5% post-results. However, the bank's mainland China business faced a significant setback, with a 66% drop in pre-tax profit to $1.1 billion, partly due to a $2.1 billion write-off related to its Bank of Communications holdings.
HSBC's restructuring efforts have been extensive, including 11 business exits worldwide, a reduction in senior management, and a reorganization of operating divisions. These moves have contributed to a 50% stock surge in 2025, followed by an additional 10% climb this year, valuing the bank at approximately $300 billion.
The bank's acquisition of Hang Seng Bank and the resulting synergies are expected to generate $900 million in pre-tax revenue by 2028, despite anticipated restructuring costs of $600 million. HSBC also announced a final dividend of 45 cents per share, lower than the previous year's total of 87 cents.
Elhedery's compensation increased by 18% to £6.6 million in 2025. Analysts at Jefferies praised the strong results but questioned the cost forecast for 2026, considering the competitive landscape and AI investment needs. HSBC's recent appointment of Brendan Nelson as permanent chair adds further leadership stability.
