HSBC reported annual profits on Wednesday that exceeded expectations, driven by strong performance in its wealth management and markets businesses. The bank also unveiled ambitious cost-cutting plans as its new CEO, Georges Elhedery, pushes forward with a strategic overhaul to enhance returns in its Asia-focused operations.

Alongside its financial results, HSBC announced a $2 billion share buyback, set to be completed before the next earnings report.

Elhedery, who assumed the CEO role in September last year, is leading a significant restructuring effort amid an uncertain global economic environment. Diverging interest rate policies—potential cuts in the eurozone, stability in the U.S., and expected hikes in Japan—add complexity to the outlook.

For 2024, HSBC posted a pre-tax profit of $32.3 billion, up from $30.3 billion the previous year and surpassing analysts’ estimates of $31.7 billion. The bank aims to achieve $300 million in cost reductions in 2025 and plans to cut its cost base by $1.5 billion annually by the end of 2026.

“We are committed to optimizing resource allocation across geography, business lines, and our balance sheet,” Elhedery stated in the earnings release. “This will help us manage costs and capital more dynamically while sharpening our investment strategy.”

Following the earnings announcement, HSBC’s Hong Kong-listed shares rose by over 1%, outperforming the broader market, which declined by 0.1%.

Morningstar Senior Equity Analyst Michael Makdad noted that while HSBC's plan to reduce personnel expenses by 8% over the next two years is a positive step, the announcement lacked major new restructuring initiatives. However, he emphasized that efficiency improvements at a bank of HSBC’s scale require careful coordination across various operational areas.

HSBC has set a goal of achieving a mid-teens return on average tangible equity from 2025 to 2027. However, the bank acknowledged that the medium-term interest rate outlook remains uncertain.

In 2024, its wealth and personal banking division, the bank’s largest revenue contributor, saw a 5.2% increase in pre-tax profit to $12.2 billion, driven by new customer acquisitions and expanded wealth management offerings. Meanwhile, profit from global banking and markets surged nearly 27% to $7.1 billion.

The bank also declared a fourth interim dividend of $0.36 per share, bringing the total 2024 dividend to $0.87 per share. This includes a special $0.21 dividend from the sale of its Canadian operations.

Elhedery, a longtime HSBC executive who previously served as CFO, has moved swiftly to implement structural changes. He has streamlined senior management and reorganized business divisions along East-West lines. As part of this shift, HSBC has significantly scaled back its mergers-and-acquisitions and equity capital markets teams in Europe and the Americas, reinforcing its strategic focus on Asia.