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HSBC is set to begin job cuts in its investment banking division, starting in Asia next week, as part of CEO Georges Elhedery’s restructuring strategy. The layoffs will be staggered over several weeks and months, focusing on performance and operational streamlining, with significant reductions expected among senior staff. The bank is also winding down its M&A and equity capital markets activities in Europe and the Americas while retaining capabilities in Asia and the Middle East.
HSBC's Hong Kong shares fell 0.6% to HK$84.3, ending an eight-day streak of gains, amid reports of upcoming job cuts in its investment banking division as part of CEO Georges Elhedery's cost-cutting overhaul. The bank is expected to announce $1.5 billion in annual savings from its restructuring efforts, with its stock on track for the largest one-day percentage drop since January 23. Despite the decline, HSBC's shares rose 23.2% last year.
HSBC Holdings is set to initiate a new round of layoffs at its investment bank, starting in Asia on February 17, with plans to extend globally. The layoffs aim to target underperforming employees and streamline operations, expected to unfold over several weeks or months. A spokesperson emphasized the bank's focus on areas with competitive advantages and growth opportunities.
HSBC Holdings reported a total operating revenue of US$66.985 billion for 2024, reflecting a 1.9% year-over-year increase. Net interest income decreased by 9.6% to US$32.359 billion, while non-interest income rose by 15.7% to US$34.626 billion. The net profit reached US$23.088 billion, up 2.9%, with a full-year dividend per share of US$0.88, marking a 44.3% increase.
HSBC Holdings executed a bullish block trade of 150.8K shares at $85.1, resulting in a turnover of $12.833 million. Analysts anticipate a 5%+ year-over-year rise in the bank's EBIT for 2024, with a focus on dividends, share buybacks, and business restructuring guidance. Meanwhile, a survey reveals that 72% of analysts believe AI will have a limited impact on corporate profitability this year.
HSBC is set to report its fourth-quarter and full-year 2024 results on February 19, with expectations of increased revenues and earnings year-over-year, driven by strong investment banking and trading revenues. However, higher operating expenses due to market share growth and organizational restructuring may impact overall performance. The consensus estimate for earnings is $1.41 per share, reflecting a 147.4% increase from the previous year, while sales are projected at $15.38 billion, indicating an 18.2% growth.
HSBC Holdings has completed its US$3 billion share buyback program, initially announced on October 30, 2024. The company repurchased 186 million ordinary shares on UK venues at an average price of GBP7.4862 and 131 million shares on the Hong Kong Stock Exchange at HKD74.4516. Recently, on February 11, HSBC bought back 3.6732 million shares in Hong Kong at a weighted average price of HKD83.5448, totaling HKD307 million.
Barclays has raised its price target for HSBC Holdings to GBP9.40 from GBP8.20, maintaining an Equalweight rating. The revision reflects expectations of potential earnings upside and a favorable self-improvement narrative, although analysts emphasize the need for clarity on any restructuring plans. Despite a positive outlook, geopolitical volatility remains a concern, with HSBC's current trading multiple at 1.1 times tangible net asset value.
Barclays has raised its price target for HSBC Holdings to GBP9.40 from GBP8.20, maintaining an Equalweight rating. The revision reflects anticipated earnings upside and a potential self-improvement narrative, although details on restructuring are needed for a clearer outlook. Analysts project a 15% return on tangible equity by 2027, while acknowledging geopolitical volatility's impact on market sentiment.
HSBC Holdings repurchased 2.0348 million shares on the Hong Kong Stock Exchange last Friday, spending HKD166 million. The shares were bought at prices ranging from HKD81.35 to HKD81.95, with a weighted average price of approximately HKD81.72 per share.
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