Europe’s largest lender, HSBC, announced on Wednesday that its annual pre-tax profit reached $29.91 billion, surpassing estimates due to strong performance in its wealth management division and Hong Kong businesses.
As annual profit drops by 7.4 percent, HSBC’s revenue increased by 4 percent year-on-year. The following are the HSBC full-year results against the consensus estimates prepared by the bank, including: Pre-tax profithad estimated at $29.91 billion compared to $28.86 billion. Revenue had projected $68.27 billion compared to $67.36 billion.
The outcomes follow immediately after HSBC finalized the privatization of the Hang Seng Bank on January 26, after which shares of the latter were subsequently delisted from the Hong Kong Stock Exchange.
HSBC reported last year that the agreement might add to its earnings, which was a better use of capital than buybacks.
Morningstar’s Equity Analyst Kathy Chan said, “We do anticipate revenue and cost synergies between the two brands, but we expect that to come through gradually in the medium term.”
The take-private offer was “an exciting opportunity to grow both Hang Seng and HSBC,” HSBC Group Chief Executive Georges Elhedery added last October, citing that the bank will retain the brand of Hang Seng and also invest in enhancing its abilities.
Earlier in the month, Bloomberg indicated that HSBC was poised to give few or no bonuses to several bankers as it approaches a harder, more performance-based compensation system like its fellow Wall Street firms.
People familiar with the matter said that the bank plans to utilize the upcoming bonus round to drive out non-performers in sectors like investment banking and wealth management, which may involve the management of directors.
Thus, HSBC has not yet verified whether anything final has been decided on the plans to cull underperformers. Morningstar’s Chan informed that she would not be surprised by the further headcount cut, as the overall objective of the Group is to increase operational efficiency and achieve cost savings.
