HSBC Holdings plc (HSBA) reported a first-half 2025 profit before tax of $15.8 billion, down sharply from $21.5 billion in 1H24, primarily due to one-off impairments tied to its stake in China’s Bank of Communications and the absence of large disposal gains that boosted the prior year’s results. Stripping out those items, the underlying picture was far stronger: profit before tax rose 5% to $18.9 billion on a constant-currency basis, as momentum in Wealth and Markets helped offset higher expected credit losses and modestly rising costs.
Revenue declined 9% year-over-year to $34.1 billion due to disposals in Canada and Argentina, but constant-currency revenue excluding notable items climbed to $35.4 billion, led by robust fee income in Wealth and increased trading activity amid market volatility. Net interest income held steady at $28.5 billion, while net interest margin (NIM) slipped 5 basis points to 1.57%, reflecting lower global rates and the drag from foreign currency translation. Despite these headwinds, HSBC maintained strong capital and liquidity positions, with a Common Equity Tier 1 (CET1) ratio of 14.6%, comfortably within its 14–14.5% medium-term target.
The group’s operational performance continues to reflect its shift toward a simpler, more focused model. CEO Georges Elhedery emphasized that all four business lines grew revenue during the first half, underscoring the bank’s diversified earnings base. A $3 billion share buyback and second interim dividend of $0.10 per share signal management’s confidence in cash generation, even amid a softer macro backdrop. Year to date, HSBC shares have gained nearly 27%, outpacing both the broader European banking sector and most U.K. peers.
Financial Story: Resilient Core, Transitory Headwinds
| Metric | H1 2025 | H1 2024 | YoY Change | Commentary |
|---|---|---|---|---|
| Profit Before Tax | $15.8B | $21.5B | ▼ 26% | Lower due to impairments and prior-year disposals |
| Profit After Tax | $12.4B | $17.6B | ▼ 30% | Reflects BoCom impairment and higher credit costs |
| Revenue | $34.1B | $37.3B | ▼ 9% | Underlying growth in Wealth, offset by lost disposals |
| Constant-Currency Revenue (ex-notables) | $35.4B | $33.5B | ▲ 6% | Strong performance in Wealth and Markets |
| Net Interest Income | $28.5B | $28.6B | — | Stable on constant currency basis |
| Net Interest Margin (NIM) | 1.57% | 1.62% | ▼ 5 bps | Impact from lower rates and FX |
| Expected Credit Losses (ECL) | $1.9B | $1.0B | ▲ 90% | Driven by Hong Kong CRE sector pressures |
| Operating Expenses | $17.0B | $16.3B | ▲ 4% | Technology investment and restructuring costs |
| Return on Tangible Equity (RoTE) | 14.7% | 21.4% | ▼ 6.7 pts | 18.2% excluding notable items |
| CET1 Ratio | 14.6% | 14.9% | ▼ 0.3 pts | Remains within target range |
| Dividend per Share | $0.10 | $0.10 | — | Maintained with additional buyback plan |
| Share Buyback | $3.0B | $3.0B | — | To complete by Q3 2025 |
HSBC’s first-half results illustrate a familiar theme: resilient operating performance clouded by transitory accounting impacts. The bank’s underlying earnings momentum remains intact, with constant-currency revenue and profit both rising on an adjusted basis.
Wealth Management and Premier Banking were key drivers, benefiting from higher client activity and improved fee income in Hong Kong. Markets also performed strongly, as volatile trading conditions lifted income in FX, debt, and equity markets. Together, these segments helped offset weaker commercial lending and increased impairment charges from the Hong Kong commercial real estate sector.
Despite headline declines in reported profit, HSBC’s fundamentals remain solid. Cost discipline is holding, with target-basis expenses up just 3% despite inflation and ongoing tech investments. Credit costs are normalizing but remain manageable at roughly 40 basis points of average loans, and customer deposits grew to $1.72 trillion, up $64 billion on a reported basis. Management reiterated its mid-teens RoTE guidance for 2025–2027, noting that the bank’s structural hedge continues to offset some margin compression from lower rates.
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1. Wealth and Markets Drive Underlying Growth
HSBC’s wealth franchise continues to anchor its growth story. Wealth and Personal Banking posted double-digit fee income growth, supported by higher client activity, strong inflows into investment products, and robust demand in Hong Kong. International Wealth and Premier Banking delivered particularly strong results, benefiting from cross-border flows and improved market sentiment in Asia. The segment’s performance underscores HSBC’s ability to monetize its global scale, even as it simplifies its structure.
Market activity also provided a meaningful boost, with solid gains in foreign exchange and fixed-income trading amid global volatility. Management highlighted that the bank’s diversified product base has allowed it to maintain stable performance across rate cycles. This diversity, spanning wealth, transaction banking, and markets, remains a competitive edge as peers retrench from cross-border operations.
2. Hong Kong CRE and Credit Risks Remain a Watchpoint
While earnings momentum is improving, risks are far from gone. The most prominent remains Hong Kong’s commercial real estate exposure, which drove most of the year’s higher credit charges. The sector continues to face oversupply and declining asset values, forcing HSBC to boost provisions and adjust its ECL models. The bank also noted broader geopolitical and trade-related uncertainty as factors influencing its more cautious outlook.
Still, credit quality elsewhere remains stable. Loan growth was modest but positive, with customer lending balances rising $7 billion on a constant-currency basis and deposit levels showing resilience. HSBC’s diversified balance sheet, spanning Asia, the Middle East, and the U.K., provides a buffer against localized shocks. While CRE-related losses could linger through 2025, management emphasized that overall credit metrics remain well within historical norms.
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3. Simplification and Cost Efficiency on Track
HSBC’s ongoing simplification strategy remains central to its transformation. The group continues to streamline operations, having exited non-core markets such as Canada and Argentina, while reorganizing around four global business lines. These efforts have already reduced structural complexity, improved decision-making speed, and freed up capital for reinvestment in core growth areas like Wealth and Transaction Banking.
Operating expenses increased 4% year-over-year, mainly from $0.6 billion in restructuring costs and higher technology investment. However, the bank’s cost target of ~3% growth for 2025 remains on track, with anticipated savings from simplification expected to flow through in 2026. HSBC’s CET1 ratio of 14.6% continues to support both dividends and buybacks, giving the group flexibility to maintain shareholder distributions while reinvesting for future growth.
The TIKR Takeaway
HSBC remains a global banking heavyweight, navigating a shifting macro landscape with relative stability. The drop in headline profit masks solid underlying growth in its core franchises, especially in Wealth and Markets. The Hong Kong CRE exposure is a genuine near-term risk, but the bank’s diversified earnings and disciplined capital management leave it well placed to absorb volatility.
The transformation plan under Georges Elhedery is still in its early chapters, but progress is clear. Simplification, disciplined cost control, and steady shareholder returns form the backbone of HSBC’s investment case heading into 2026. Execution will determine whether this momentum translates into sustained earnings growth and whether the market will reward the strategy with a higher valuation multiple.
Should You Buy, Sell, or Hold HSBC?
At this stage, HSBC’s valuation remains attractive relative to peers, supported by a near 7% total capital return yield (dividends plus buybacks) and robust capital buffers. However, near-term upside looks capped by macro uncertainty and persistent credit risks in Asia.
Long-term investors may find the risk/reward compelling if management can maintain mid-teens RoTE and deliver expense leverage post-simplification. The story here isn’t one of rapid transformation but steady, measured progress, and for a global bank of HSBC’s scale, that may be exactly what investors want.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
