HSBC Holdings: Revenue and EPS Miss Expectations in 2024

HSBC Holdings (LON:HSBA) reported its full-year 2024 earnings on February 19, 2025, with revenue and earnings per share (EPS) missing analyst estimates by 1.1% each. The bank's revenue grew by 8.7% to US$61.3 billion, while net income increased by 2.2% to US$22.9 billion. However, the profit margin decreased to 37% from 40% in 2023, driven by higher expenses. EPS also increased to US$1.25 from US$1.15 in 2023.

HSBC's banking performance indicators showed a net interest margin (NIM) of 1.56%, down from 1.66% in 2023, and a cost-to-income ratio of 50.2%, up from 48.5% in 2023. Non-performing loans (NPLs) increased to 2.41% from 2.04% in 2023. The company's share price remained broadly unchanged from a week ago, despite the earnings miss.

Georges Elhedery, HSBC's Group CEO, commented on the results: "Our strong 2024 performance provides firm financial foundations upon which to build for the future, as we prioritise delivering sustainable strategic growth and the best outcomes for our customers. Since becoming CEO, I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy. We are creating a simple, more agile, focused bank built on our core strengths. We continue to take deliberate and decisive steps. This includes creating four complementary, clearly differentiated businesses, aligning our structure to our strategy and reshaping our portfolio at pace and with purpose. I have put in place a smaller, core team of exceptionally talented leaders driven by a growth orientated mindset and a firm focus on dynamically managing our costs and capital. We are embedding this approach across the organisation to ensure we are continually focused on these two important principles. Each targeted action we are taking is designed to unlock HSBC’s full potential. We look to the future with confidence and clarity of purpose."

The earnings miss may have been influenced by several factors, including disposal losses and strategic transactions, increased deployment of commercial surplus to the trading book, and higher operating expenses. Despite the miss, HSBC's share price remained relatively stable, indicating that investors may be focusing on the bank's long-term prospects and strategic initiatives. As HSBC continues to execute its strategic plan, investors will likely monitor the bank's performance closely to assess its ability to meet or exceed expectations in the future.