HSBC Holdings PLC (LSE:HSBA) announced a $2 billion share buyback as it posted final results for a year when revenue was flat and underlying profits rose 4.3% to beat market expectations.
Chief executive Georges Elhedery, who was promoted to the top job last September, said his main focus has been “simplifying” the business and injecting “energy and intent”, with an emphasis on cost discipline.
He outlined new targets for $300 million in cost reductions in 2025 and a $1.5 billion reduction in the cost base by the end of 2026, though the job cuts will require £1.8 billion in severance and other costs.
Elhedery is also looking to maintain a “mid-teens” return on average tangible equity (RoTE) this and the next two years, with the helpful get-out clause that the outlook for interest rates “remains volatile and uncertain, particularly in the medium term”.
Other new targets include $42 billion in net interest income for 2025 with cost growth at around 3%, and maintaining a 50% dividend payout ratio, with the share buy-back planned to be completed by the first quarter results at the end of April.
For the fourth quarter, a dividend of $0.36 per share was declared, bringing the total dividend for the year to $0.87 per share, including the special dividend paid in June following the sale of HSBC Canada.
Annual profit before tax came to $32.3 billion, up $2 billion to beat the $31.7 billion consensus forecast.
This was despite net interest income falling by $3.1 billion, though there was growth at HSBC UK from the benefit of its interest rate hedge.