HSBC, Europe's biggest bank, said it has made sustainable cost savings of $2 billion after one year of a three year turnaround plan, and is on target to meet its return on equity and other financial targets.     

HSBC has sold 28 businesses, and some 15,000 staff have been transferred outside the group, with the exits and disposals releasing about $55 billion in risk-weighted assets, the bank said in a statement released to the Hong Kong bourse on Thursday.     

"We will continue to simplify HSBC, enabling us to integrate systems and operate to high global standards internationally," chief executive Stuart Gulliver said in the statement. "We will continue to run off our legacy assets, including the US consumer and mortgage lending book."     

With Gulliver's focus on shrinking the bank, analysts and investors have indicated he may soon be inclined to highlight where HSBC is expanding.     

In a separate statement, HSBC chairman Douglas Flint said the board is "very satisfied" with progress made on the strategy, but return on equity (RoE) and cost efficiency metrics lag the stated targets a year after it was launched.     

Gulliver, a 32-year HSBC veteran who took over the top job from Michael Geoghegan, set out to get RoE - a key measure of profitability - above 12 per cent, and to cut costs by up to $3.5 billion to get them below 52 per cent of revenue.     

HSBC has 89 million customers across 85 countries, and has a wide presence across Asia Pacific, with a particular strength in Greater China. The bank's Hong Kong profit before tax was $1.9 billion, while the rest of Asia Pacific was $2 billion.     

Gulliver wants to steer the bank back to its roots as a financier of global trade.                       

First-quarter results showed annualised cost savings reaching $2 billion after 14,000 job cuts, shaving the underlying cost/income ratio to 55 per cent from 61 per cent in 2011.         

HSBC embarked on almost 30 deals in the last year to move out of businesses that lack scale, don't make money or don't connect with other areas. There have been big US sales, and smaller moves in Europe, including closures in Poland, Georgia and Slovakia, and in Latin America, where HSBC has sold or plans to sell businesses in a string of countries. Asia has not been immune, with divestments in Thailand, South Korea and Japan.     

RoE, which topped 15 per cent each year from 2004-07 before plunging to 4 to 5 per cent in the financial market crisis, will come back under pressure as Basel III regulations come in.      

All banks face the same pressure to divert cash to their reserves, and that could cut up to 2 percentage points from an HSBC RoE which reached 11 per cent last year and held at that level in the first quarter of this year.               

Although there are fears Asian growth is slowing, HSBC is expected to pick up business there as European rivals retrench, under pressure to shrink and focus lending at home. HSBC's share of Asia trade finance jumped to 14 per cent in the first quarter from 3 per cent in 2010, Morgan Stanley analysts estimated.         

Costs in Europe jumped above 70 per cent of underlying revenue.         

HSBC's problems in the United States date back to its disastrous 2003 purchase of Household Finance, a unit crushed by the subprime mortgage debacle and subsequent 2008 financial crisis. Gulliver has accelerated change in the United States, selling half of HSBC's branches and its credit card business.

London-listed HSBC shares closed down 2.5 per cent on Wednesday at a 15-week low. The stock is up a little over 9 per cent so far this year, outperforming the benchmark FTSE 100, which is down more than 3 per cent.     

The bank's Hong Kong-listed shares had their biggest one-day fall this year on Wednesday, losing 3.4 per cent, and on Thursday were down 0.6 per cent in a broader market that was up 0.5 per cent. T he stock has declined around 12 per cent so far in 2012. - Reuters