Global diversified banking titan HSBC Holdings on Wednesday reported a better-than-expected profit before tax and dividend payout for the 2024 financial year following the disposal of the group’s banking businesses in Canada and Argentina, as well as the recycling of foreign currency reserve losses and other reserves.

The London-headquartered bank said its profit before tax reached $32.3 billion last year – up 6.5 percent from 2023. Revenue was largely flat at $65.9 billion for the period.

The lender approved a fourth dividend of $0.36 per share, resulting in a total of $0.87 per share for 2024, including a special dividend of $0.21 per share. The total dividend jumped 42.6 percent from that of the previous year.

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HSBC Holdings said it intends to initiate a share buyback of up to $2 billion which it expects to complete ahead of its first-quarter results this year. Market analysts expect the bank to initiate a share buyback program of up to $11 billion in 2025.

Looking ahead, the bank said is aiming for a 15-percent return on average tangible equity from 2025 to 2027.

Chief Executive Officer Georges Elhedery said the group had established a small core team of exceptionally talented leaders with a growth orientated mindset to manage costs and capital in a dynamic manner.

“We are creating a simple, more agile, focused bank built on our core strengths, creating four complementary, clearly differentiated businesses, aligning the structure to our strategy and reshaping our portfolio. We’re embedding this approach across the organization,” he said.

The bank’s net interest income, which gauges the bank’s performance in the traditional lending business, however, fell 8.6 percent, or about $3.1 billion, to $32.7 billion, due to the business disposals and higher funding costs associated with the redeployment of the lender’s commercial surplus to the trading book. The group’s net interest margin declined by 10 basis points to 1.56 percent during the period.

The banking titan expects credit losses and other credit impairment charges to reach $3.4 billion, including $400 million relating to the stage three charges in the Chinese mainland’s commercial real-estate sector, and another $100 million relating to the Hong Kong property market.

Moody’s Ratings said that due to headwinds in the commercial real-estate sector and slower residential property sales, Hong Kong banks may face ongoing pressure to increase loan-loss provisions that may weigh on their profitability over the next few quarters.

S&P Global Ratings sees HSBC maintaining its healthy earnings and credit profile to remain robust in the next two years.

“HSBC’s strong performance is set to continue this year, with its broadly spread loan portfolios by geography and asset class, and credit losses will be contained despite liquidity strains in Hong Kong’s commercial real-estate market,” said Richard Barnes, primary credit analyst at S&P Global Ratings.

“Increased structural hedging will partly mitigate the impact of falling policy rates and support continued healthy earnings,” the credit analyst added.

In terms of business lines, wealth and personal banking constitutes the highest portion of 37.7-percent share of HSBC’s profit before tax, as the bank’s net fee income rose 3.8 percent to $12.3 billion.

But, Barnes warned that HSBC is more exposed to geopolitical and trade tensions than other competitors.

“HSBC’s strategy could be hampered by a material decoupling of particularly China and the United States. The bank’s transaction banking revenue could be adversely affected by a more significant disruption to international trade patterns and volumes,” he said.

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HSBC Chairman Mark Tucker said the United States’ policy focus shift has added uncertainty to the global growth outlook, and international trade growth also seems to have begun slowing down.

The Hongkong and Shanghai Banking Corporation contributed 63.4 percent to the banking group’s profit before tax, followed by HSBC UK Bank’s 22.2 percent.

HSBC’s share price in Hong Kong soared 1.43 percent on Wednesday to close at HK$88.45 ($11.34) apiece. The benchmark Hang Seng Index dipped slightly to 22,944 points.