(Feb 25): HSBC Holdings plc reported better-than-estimated earnings for 2025 as Europe’s largest bank closed out a year in which its market value broke through GBP200 billion (US$270 billion or $342.05 billion) for the first time in its history.
The London-headquartered lender with a focus on Asia on Wednesday posted pre-tax profit of US$29.9 billion in the 12-month period, exceeding the company-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 the year — six months ahead of schedule.
“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 an interview on Bloomberg Television.
The lender lifted its return on tangible equity targets to 17% or better for this year and in 2027 and 2028, according to Elhedery. The bank’s shares jumped as much as 4.1% in early afternoon Hong Kong trading on Wednesday.
The stronger guidance reflects “management confidence” around the direction of Hong Kong’s benchmark interest rate and continuing growth in deposits, Morgan Stanley’s analysts wrote in a note following the results, adding that they will raise the bank’s earnings estimate by 10%.
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Since taking over as the CEO in 2024, Elhedery has led a radical restructuring of the bank, cutting thousands of jobs, 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 Ltd, a major bet on growth in the Asian financial hub.
Its Hong Kong business saw a 6% jump in revenue to US$15.9 billion, while the UK arm saw a 5% 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 of that was booked in the region.
At pace
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The revamp has earned plaudits from investors, with the bank’s shares having surged almost 90% since Elhedery took the helm. The stock rose to an all-time high earlier this month, while its market value climbed above GBP200 billion in December, a key milestone for the lender founded in 1865. Michael Roberts, HSBC’s head of corporate and investment banking, said in an interview last month that it was on course for a capitalisation in excess of GBP300 billion.
“We are transforming with precision, with discipline, and we are 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,” Elhedery said.
The lender 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 a statement in January.
Elhedery has 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.
“A strong culture is what turns it into results,” Elhedery wrote in his annual letter to shareholders. “This is why we are investing to build a high-performance culture.”
Overall, the strong results are pushing up the bonus pool, which rose about 10% 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.
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