HSBC earnings top forecasts thanks to strong wealth business

Banking giant HSBC posted better-than-expected 2025 earnings on Wednesday thanks to a strong performance in its wealth business while it pressed ahead with sweeping overhauls to streamline its structure and cut costs.

Chief executive Georges Elhedery hailed "a year of decisive action and swift execution, which is reflected in our strong performance. Each of our four businesses performed well and we have strong momentum across the bank".

The firm saw pre-tax profit fall US$2.4 billion to US$29.9 billion last year, it said in a filing with the Hong Kong Stock Exchange. That beat an estimate of US$28.9 billion, according to Bloomberg News.

Profit attributable to shareholders came in at US$21.1 billion last year, from US$22.9 billion in 2024.

Elhedery added that the bank was "raising our ambition and targeting a 17 percent (return on tangible equity) or better, excluding notable items, in each year from 2026 to 2028".

"We are also targeting year-on-year revenue growth over the same period on the same basis, rising to five percent in 2028."

The firm said the drop in 2025 pre-tax profit was mainly down to a US$4.9 billion year-on-year net adverse impact from notable items, including dilution and impairment losses of US$2.1 billion related to its associate Bank of Communications.

HSBC cited "a strong performance" from its wealth business, which saw US$2.4 billion growth in constant currency profit before tax excluding notable items.

The London-headquartered lender concluded a drawn-out shakeup of its leadership in December when it picked finance industry veteran Brendan Nelson to replace Mark Tucker as chairman.

Nelson said in a shareholder letter on Wednesday that the global economy was expected to expand this year.

"Despite significant policy uncertainty, global trade is also set to grow, supported by the expansion of new trade corridors and the boom in AI hardware demand," Nelson said.

"Inflation should continue drifting downward, although with divergence across markets. Somewhat uneven growth across industries and geographies could contribute to periodic financial volatility."

Nelson pointed to the United States as a "key driver of global growth, reaping the benefits of sizeable investments in AI, tax cuts and incentives, as well as substantial deregulation".

"In China, a stronger policy push should anchor its growth, and we expect it to broadly maintain its expansion pace of recent years, as structural reforms start to gain traction," he added.

Investors welcomed the report, pushing HSBC's shares up 2.7 percent in afternoon trade in Hong Kong.

They had already doubled since Elhedery took over as CEO in 2024, and hit a record high this month.

The bank said in January that it had completed its privatisation of its Hong Kong subsidiary Hang Seng Bank.