HSBC, Europe's biggest bank, said it cut costs by $2 billion after one year of a 3-year turnaround plan, and is on target to meet its return on equity and other financial targets.

The bank is close to already achieving the bottom end of a $2.5-$3.5 billion range of annualised savings by next year, as set out by CEO Stuart Gulliver, who is steering HSBC back to its roots as a financier of global trade.

HSBC has sold 28 businesses, taking some 15,000 staff off its payroll, and releasing about $55 billion in risk-weighted assets, the bank said in a statement in Hong Kong on Thursday. Having focused on shrinking the bank, analysts and investors expect Gulliver may soon point to where HSBC is expanding.

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

Separately, HSBC Chairman Douglas Flint said the board was "very satisfied" with progress made on the strategy, but added that 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 percent, and make sustainable cost savings of up to $3.5 billion, bringing costs below 52 percent of group annual revenue.

The bank was behind those targets at the end of March, with RoE at 6.4 percent and costs at 64 percent of revenue.

"I think HSBC should come out and be honest about it," said Jim Antos, an analyst at Mizuho Securities in Hong Kong. "In reality, there was a force majeure in Europe blowing up, and they will need more than 3 years to meet their targets." HSBC also said the integration of its four businesses - retail banking and wealth management, commercial banking, global banking and markets, and private banking - would deliver incremental revenue of $1.5 billion in the short to medium term. Last year, it brought in an additional $500 million, the bank said. 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 U.S. sales, and smaller moves in Europe, including closures in Poland, Georgia and Slovakia. ( C) Reuters