HSBC Holdings Plc has increased its overall bonus pool by 10% to $3.93 billion, marking the highest level in at least a decade. This move comes as part of a sweeping overhaul led by CEO Georges Elhedery, who aims to pivot the lender towards a Wall Street-type bonus system. Elhedery stated that the new compensation structure is designed to attract, hire, and retain talent, emphasizing a more performance-driven approach.
However, this focus on performance also means that some bankers, particularly those in investment banking and wealth management, are facing little to zero bonuses. The bank plans to encourage underperforming staff, including those at managing director levels, to depart after bonus payouts. This strategy reflects a more hard-edged, "eat-what-you-kill" stance, aiming to emulate rivals on Wall Street.
In other financial news, HSBC reported a second-quarter pre-tax profit of $10.1 billion, surpassing analysts' estimates of $9.51 billion. Revenue for the quarter reached $19.1 billion, exceeding estimates of $18.57 billion, and representing a 16% year-on-year gain. The strong performance was driven by higher net interest income, which rose 9% to $9.29 billion, and other fees, along with a $2.6 billion net favorable impact from notable items, including a one-off gain of $1.3 billion. The bank's board also approved a second interim dividend of 10 cents per share and initiated a share buyback of up to $1 billion. HSBC maintained its targeted return on tangible equity of 17%, with an annualized RoTE of 19.1% in the reported quarter, excluding items. Operating expenses fell 2% due to lower restructuring costs, and the bank raised its restructuring cost savings target from $1.5 billion to $2 billion.
