HSBC reported a decline in annual profits on Wednesday, though the bank’s financial results still exceeded market expectations for the year. The banking giant posted profit before tax of $29.91 billion for 2025, down from $32.31 billion in the previous year, but ahead of consensus estimates of $28.86 billion provided by the bank.
The HSBC annual profits decrease was primarily attributed to the impact of notable items, including impairment losses, restructuring costs, and other expenses related to the simplification of its business operations. Despite these challenges, the bank demonstrated resilience across several key financial metrics.
Revenue for the year increased by 4% to $68.3 billion, surpassing estimates of $67.36 billion, according to the bank’s statement. Fourth quarter revenue reached $16.36 billion, a significant increase from $11.56 billion reported during the same period in 2024.
HSBC Annual Profits Beat Analyst Forecasts
The bank’s pre-tax profit in the fourth quarter totaled $6.8 billion, representing a decline from $7.3 billion in the previous three months. However, this figure showed substantial improvement compared to the $2.28 billion reported for the fourth quarter of 2024.
Additionally, net interest income reached $34.8 billion for the year, marking an increase of $2.1 billion compared to 2024. Net interest income represents the difference between what the bank pays savers and what it receives from borrowers in interest payments, serving as a crucial indicator of banking profitability.
Banking Performance Metrics Show Mixed Results
The bank’s return on tangible equity for the year stood at 13.3%, down from 14.6% in 2024. However, when excluding notable items such as restructuring costs, this figure reached 17.2%, demonstrating stronger underlying performance in the bank’s core operations.
Meanwhile, HSBC’s board approved a fourth interim dividend of $0.45 per share, bringing the total dividend to $0.75 per share for 2025. This represents a decrease from the $0.87 per share distributed in the previous year, reflecting the impact of restructuring expenses on shareholder returns.
Future Outlook and Revenue Growth Targets
In terms of forward guidance, HSBC announced ambitious targets for the coming years. The bank is aiming for a return on tangible equity of 17% or better for 2026, 2027, and 2028, excluding notable items from these calculations.
The institution also projected year-on-year revenue growth from 2026 to 2028, with targets rising to 5% growth in 2028 compared with 2027. These projections exclude notable items and are calculated on a constant currency basis to provide clearer insight into operational performance.
Georges Elhedery, group CEO of HSBC, emphasized the bank’s strong performance across its business divisions. According to Elhedery, each of the bank’s four businesses performed well, creating strong momentum throughout the organization.
In contrast to the overall profit decline, the CEO highlighted the bank’s confidence in raising its ambition for future years. The banking restructuring appears designed to position HSBC for sustained profitability improvements despite near-term costs associated with organizational simplification.
Investors and analysts will continue monitoring HSBC’s progress toward its 17% return on tangible equity target throughout 2026. The bank’s ability to achieve its revenue growth projections while managing restructuring costs remains a key factor in assessing its financial health and strategic direction.
