Investing.com-- HSBC Holdings PLC (LON:HSBA) reported an increase in annual profit on Wednesday as strong performance in wealth management and trading helped offset a decline in net interest income.
The bank also announced a new $2 billion share buyback, reaffirming its focus on returning capital to shareholders.
HSBC’s profit before tax rose to $32.3 billion in 2024, 6.6% up from $30.3 billion a year earlier, boosted by gains from the sale of its Canadian business.
Excluding notable items, profit grew by $1.4 billion to $34.1 billion, supported by strength in wealth and investment banking.
However, net interest income (NII), a key driver of earnings, fell by $3.1 billion to $32.7 billion, reflecting higher deposit costs and asset sales. HSBC now forecasts 2025 banking NII at around $42 billion, as market conditions pressure margins.
Hong Kong-listed HSBC shares inched 0.3% lower after the results.
The results come as CEO Georges Elhedery pushes ahead with a cost restructuring plan aimed at simplifying HSBC’s operations and cutting $1.5 billion in annual expenses by 2026.
Elhedery said HSBC remains committed to disciplined cost management and capital returns. “Simply put, we are aligning our structure to our strategy,” he said in a statement
The bank declared a fourth interim dividend of $0.36 per share, bringing the total payout for 2024 to $0.87 per share, including a special dividend from the Canada sale.
The latest $2 billion buyback brings HSBC’s total repurchases for 2024 to $9 billion, reducing its share count by 11% since early 2023, the company said.
Total (EPA:TTEF) revenue remained stable at $65.9 billion as growth in wealth and investment banking offset a $3.1 billion decline in NII. HSBC’s net interest margin dropped 10 basis points to 1.56%.
Operating expenses rose 3% to $33 billion, driven by technology investments and inflationary pressures.
HSBC reaffirmed its mid-teens return on tangible equity (RoTE) target for 2025-2027, despite uncertainty over interest rates. The bank expects 3% cost growth in 2025, excluding one-time items, and aims to maintain a CET1 capital ratio within its 14%-14.5% target range.