HSBC (NYSE:HSBC) executives used the company’s 2025 annual results presentation to highlight what Group CEO Georges Elhedery called a year in which the bank “performed, transformed, and invested for growth,” while also setting new financial targets for 2026 through 2028.
Management repeatedly emphasized that results and targets were discussed excluding notable items. The company said 2025 included $6.7 billion of notable items, which it noted had been flagged in prior quarters.
2025 results: record profit before tax and higher dividend
On shareholder returns, HSBC announced a full-year ordinary dividend per share of $0.75, up 14% from 2024. CFO Pam Kaur said that total ordinary dividends for the year amounted to $12.9 billion.
Fourth-quarter performance was also described as strong. Kaur said fourth-quarter revenues grew 6% to $17.7 billion, and profit before tax increased 17% to $8.6 billion, driven by broad-based growth in banking net interest income (NII) and fee and other income.
Deposit growth, wealth momentum, and transaction banking trends
Management pointed to growth in core balance sheet metrics. Elhedery said deposit balances grew 5% in 2025, with deposit growth in each of the bank’s four businesses. Kaur added that customer deposit balances stood at $1.8 trillion, an increase of $78 billion including “held for sale” balances, and said the fourth quarter alone saw $50 billion of deposit growth. Loans increased by $5 billion in the quarter, with the U.K. highlighted as a “standout” for mortgage and commercial lending growth.
In fee-generating businesses, HSBC highlighted:
- Transaction banking fee and other income up 4% in 2025, according to Elhedery. Kaur said in the fourth quarter, security services grew fee and other income 6%, payments grew 3%, and foreign exchange increased 1%, while trade was down 5% in the quarter but described as stable over the full year.
- Wealth fee and other income up 24% in 2025, according to Elhedery. Kaur said wealth fee and other income grew 20% year over year in the fourth quarter to $2.1 billion, with growth across four income areas. She also cited insurance contractual service margin (CSM) balance of $14.6 billion, up 21%.
HSBC also disclosed new reporting metrics for wealth. Kaur said the bank will begin reporting wealth balances and net new money, adding $608 billion of premier and private bank deposits to invested assets and removing $580 billion of third-party distribution assets. The new disclosures will replace existing ones from the first quarter of 2026. Kaur said net new money in the quarter was $26 billion, with $19 billion in Asia, and Elhedery said IWPB attracted $80 billion of net new invested assets for the year.
Hang Seng Bank privatization: rationale, capital impact, and synergy targets
A major strategic development discussed was HSBC’s $13.7 billion privatization of Hang Seng Bank, which management said closed on Jan. 26, earlier than its initial expectation of the first half of 2026. Kaur described the transaction’s financial rationale in terms of capital efficiency and earnings contribution, including the removal of a $3.8 billion minority capital inefficiency and $9.9 billion of CET1 consumption.
HSBC also laid out a multi-year synergy and upside framework through 2028:
- $0.5 billion of “reported” revenue and cost synergies by year-end 2028
- $0.4 billion of additional potential upside, which management separated from reported synergies due to lower certainty and accounting treatment
- $0.6 billion restructuring charge tied to achieving the overall $0.9 billion ambition, which Kaur said will be a “material notable item” and spent over three years
Executives said Hang Seng would retain its brand, governance, and community-bank positioning, while the privatization is intended to enable efficiencies in areas “not related to the customer proposition,” including technology harmonization and broader product access across the “red” and “green” brands.
Costs, simplification actions, and 2026 guidance
Elhedery said HSBC is pursuing “simple and agile” execution by reducing complexity and cost. Management said net managing director roles were reduced by about 15% in 2025. The bank also reiterated plans for $1.5 billion of annualized simplification savings with “immaterial revenue impact,” expected to be actioned by the first half of 2026, six months ahead of plan. Kaur said HSBC has already taken actions to realize $1.2 billion of annualized simplification savings, with $0.6 billion realized in the 2025 profit and loss statement.
In addition, management discussed reallocating costs away from non-strategic or low-returning businesses. Elhedery said the bank announced 11 business or market exits in 2025, with completed and announced exits representing $0.7 billion in annualized cost savings and around $1.0 billion of associated revenue. After the Hang Seng transaction, HSBC increased “reallocation costs” to $1.8 billion (from $1.5 billion), reflecting an additional $0.3 billion of cost synergies to be directed toward growth opportunities in Hong Kong.
For 2026, management guidance included:
- Banking NII of at least $45 billion (2025 Banking NII was $44.1 billion). Kaur noted fourth-quarter Banking NII benefited from about $100 million of non-repeat items.
- Expected credit losses (ECL) around 40 basis points, described as at the higher end of HSBC’s typical range, reflecting the economic outlook and remaining pressures in parts of Hong Kong retail and office commercial real estate.
- Target-basis cost growth of 1% for 2026, supported by simplification savings while continuing to invest in the business.
- No change to the bank’s 14%–14.5% CET1 target range. The CET1 ratio was 14.9% at year-end, and management noted the Hang Seng privatization would have an additional 110 basis point impact after the balance sheet date (in addition to 10 basis points already incurred in the fourth quarter).
Kaur said the bank’s NII assumptions use the “end January forward rate curve for all major currencies” and discussed HIBOR sensitivity, noting that earlier volatility around 1% had about a $100 million impact on Banking NII, while more recent stabilization around the mid-2% range was reflected in guidance.
New 2026–2028 targets: revenue growth, RoTE, and dividends
Looking ahead, HSBC set targets for the next three years (excluding notable items): revenues are expected to grow year on year each year, with growth rising to 5% in 2028. The bank also targeted RoTE of 17% or better for each year from 2026 to 2028 and reaffirmed a 50% dividend payout ratio each year, excluding material notable items.
During the question-and-answer session, executives said they expect 2026 revenue growth to be broad-based, with low single-digit growth in Banking NII “fundamentally driven through deposits,” and continued positive momentum in fee businesses such as wealth and transaction banking. They also said share buyback decisions would be assessed quarterly, noting the earlier statement that buybacks were expected to be suspended for up to three quarters following the Hang Seng announcement.
Elhedery concluded by describing HSBC’s strategy as creating “a simple, agile, growing bank built to generate high returns,” and said management was confident it could navigate uncertainty “from a position of strength.”
About HSBC (NYSE:HSBC)
HSBC Holdings plc (NYSE: HSBC) is a multinational banking and financial services organization headquartered in London. It traces its origins to the Hongkong and Shanghai Banking Corporation, founded in 1865 to facilitate trade between Europe and Asia, and has since grown into one of the world’s largest banking groups. The company is publicly listed in multiple markets, including the London Stock Exchange, the Hong Kong Stock Exchange and as an American depositary receipt on the New York Stock Exchange.
HSBC operates a universal banking model, serving retail, commercial, corporate and institutional clients.
