The chief executive of HSBC has indicated that his extensive revamp of Europe’s largest lender is nearing completion, despite the bank experiencing a decline in annual profits. Georges Elhedery, who took the helm in 2024, described the bank as evolving into a “simple, more agile, focused bank built for a fast-changing world.”
HSBC’s pre-tax profit dipped 7% to $29.9 billion last year, primarily influenced by one-off charges totaling $4.9 billion. Nevertheless, this figure exceeded City analysts’ expectations by nearly $1 billion, especially following an unusually robust performance in 2024.
In a notable shift in strategic goals, HSBC announced it is raising its target for return on tangible equity—an essential profitability metric for financial institutions—aiming for “17% or better” by 2028, an increase from its previous “mid-teens” target. For reference, the return for the past year registered at 13.3%. Following the announcement of its results, HSBC’s Hong Kong-listed shares rose by 2.5%.
Among the one-off charges last year, a significant $2.1 billion write-off was attributed to the bank’s stake in China’s Bank of Communications, which has faced challenges due in part to the prolonged downturn in the Chinese property market. This situation led to a sharp 66% decline in pre-tax profit for HSBC’s mainland China operations, reducing it to $1.1 billion. Additionally, the bank recorded legal provisions of $1.4 billion and $1 billion associated with restructuring efforts.
Since his appointment, Elhedery has initiated a transformative strategy by reorganizing the bank along east-west lines. This has included divesting smaller investment banking units in the U.S. and Europe and reducing the number of senior managers. Last year, HSBC executed 11 exits from various global business sectors.
These strategic moves have propelled HSBC’s London-listed stock, which surged 50% in 2025 and continued its ascent with a further 10% increase this year, contributing to a market valuation of approximately $300 billion.
Last year, HSBC also privatized its subsidiary, Hang Seng Bank, in a $13.7 billion deal. The bank aims to achieve $900 million in pre-tax revenue and cost synergies by the end of 2028 from their combined operations, although it anticipates incurring restructuring costs of around $600 million in the process.
HSBC declared a final dividend of 45 cents per share, which, when added to the 30 cents paid earlier in the year, falls short of the 87 cents total dividend distributed in 2024. Elhedery’s total compensation for 2025 was reported at £6.6 million, marking an 18% increase from the previous year.
Market analysts from Jefferies have suggested that while investors are likely to respond positively to the strong results, there may be skepticism regarding the bank’s forecast of only a 1% rise in costs for 2026, given the competitive landscape and necessary investments in AI technology.
In a significant executive change, HSBC appointed former KPMG partner Brendan Nelson as its new chair in December, concluding a lengthy search that left the bank without permanent executive leadership for several months.
