HSBC Holdings PLC (HBC) said Thursday that it was on track to hit its 2013 profitability goals as the bank completes the first leg of its three-year quest to cut costs and boost revenues.
The bank, in its investor-day presentation, said it has achieved $2 billion in cost savings on an annualized basis since it started to scale back its size and boost its profitability last year, and it expects to hit the top end of its $2.5 billion to $3.5 billion cost-savings target by the end of 2013.
The lender is sticking to its financial targets of a 12%-15% return on equity, 48%-52% cost efficiency ratio as well as a 9.5%-10.5% Tier 1 ratio.
In 2011, CEO Stuart Gulliver outlined a grand plan to turn the lender's sprawling banking empire into a more nimble entity amid criticism that it had overextended itself worldwide and wasn't providing adequate returns to investors.
The U.K.-based bank said in a statement the sale of 28 businesses it has announced so far could potentially release $55 billion worth of risk-weighted assets. The integration of its businesses has delivered $500 million of additional revenue, the bank said, adding a further $1.5 billion in revenue is expected in the short- to medium-term.
Gulliver said the bank would continue the restructuring at the same intensity as last year as the bank looks to get the four different branches of its business to work more closely together.
"What investors have been skeptical about is whether we can get our hands round HSBC," said Chief Executive Stuart Gulliver. "I think we have shown this."
However, the CEO warned that the euro-zone crisis and other regulatory changes may force the bank to increase the intensity of its restructuring.
Gulliver said he hopes that the changes at the bank's structure will turn the bank into a growth story. For years, investors have viewed investing in HSBC as a defensive move.
"We are making material progress towards getting HSBC into shape for the future--a simpler, more coherent organization that is easier to manage and control," said Gulliver. "We will continue to simplify HSBC, enabling us to integrate systems and operate to high global standards internationally."
At 0912 GMT, HSBC shares were down 6 pence, or 1%, at 529 pence in a mostly lower day for U.K. financials. The presentation on strategy was to continue throughout the day.
