HSBC profit beats forecasts with strong performance from wealth business

LONDON – HSBC Holdings reported better-than-estimated earnings for 2025 as Europe’s largest bank closed out a year in which its market value broke through £200 billion (S$342 billion) for the first time in its history.

The London-headquartered lender with a focus on Asia posted pre-tax profit of US$29.9 billion (S$37.8 billion) in the 12-month period, exceeding its own compiled analyst estimate of US$28.9 billion.

Results were lifted by a strong performance in its wealth business and its core Hong Kong franchise. HSBC also said it expects to achieve a US$1.5 billion cost-savings target in the first half of 2026 – six months ahead of schedule.

“I think the key message to take forward is number one, we are performing and this performance is delivering good earnings, strong earnings, and is delivering strong growth in all four businesses,” chief executive officer Georges Elhedery said in a Bloomberg Television interview. 

The lender lifted its return on tangible equity targets to 17 per cent or better for 2026, and in 2027 and 2028, according to Mr Elhedery. HSBC shares rose 2.5 per cent in early afternoon Hong Kong trading. 

Since taking over as CEO in 2024, Mr Elhedery has led a radical restructuring of the bank, cutting thousands of jobs, and selling some businesses while merging and closing others. He doubled down on his predecessor’s Asia-pivot strategy by taking private its troubled Hong Kong subsidiary Hang Seng Bank, a major bet on growth in the Asian financial hub. 

Its Hong Kong business saw a 6 per cent jump in revenue to US$15.9 billion while the UK arm saw a 5 per cent gain to about US$12.9 billion. The lender has been capitalising on its Asian clients – out of US$2.1 trillion in total balances, about half was booked in the region. 

The revamp has earned plaudits from investors, with the bank’s shares having surged almost 90 per cent since Mr Elhedery took the helm. The stock rose to all-time highs earlier in February while its market value climbed above £200 billion in December, a key milestone for the bank. Mr Michael Roberts, HSBC’s head of corporate and investment banking, said in an interview in January that it was on course for a capitalisation in excess of £300 billion.

“We are transforming with precision, with discipline, and we’re doing it at pace, and we expect to be able to conclude a number of the actions we set out to do earlier than initially planned,” Mr Elhedery said. 

HSBC has been exiting selective assets, and it started a review of its insurance business in Singapore. The review will cover HSBC Life Singapore and “consider all options” for the insurance manufacturing business, with no decision made, it said in January. 

Mr Elhedery has also been attempting to drive a cultural change across the bank’s more than 200,000-strong global workforce, as it grapples with competition from local and international rivals. The bank is preparing to move towards a more Wall Street-style compensation model, in which top performers share a larger part of the bonus pot while underperformers are pushed to look for opportunities outside of the company.

Overall, the strong results are pushing up the bonus pool, which rose about 10 per cent to US$3.93 billion, the highest in at least a decade. 

HSBC has so far been relatively unaffected by the tariff policies of US President Donald Trump despite operating the world’s largest trade finance operation that facilitated US$850 billion of commerce in 2023. BLOOMBERG