HSBC Holdings (LSE:HSBA) exceeded full-year profit forecasts on Wednesday and issued a 2026 net interest income (NII) outlook above market expectations, lifting its Hong Kong-listed shares by more than 2%.
The Asia-focused banking group reported pretax profit of $29.91 billion for 2025, surpassing the $28.86 billion analyst consensus compiled by Bloomberg, although lower than the $32.38 billion recorded in the previous year.
The year-on-year decline was largely attributable to $4.9 billion in notable items, including impairments related to its stake in Bank of Communications and restructuring expenses. On an adjusted basis excluding these items, pretax profit increased to $36.62 billion from $34.18 billion.
Group revenue rose 4% to $68.3 billion, supported by stronger wealth management fees and foreign exchange income. Return on tangible equity reached 13.3% for the full year, or 17.2% when excluding notable items.
HSBC projected banking net interest income of at least $45 billion for 2026, driven by deposit growth and contributions from its structural hedge. The guidance compares with an analyst consensus currently standing at $43.5 billion.
Management also indicated operating costs would rise by around 1% in 2026, implying a cost base of approximately $33.8 billion — about $500 million below consensus expectations.
“This gives management – along with visibility from the structural hedge – the conviction to produce banking NII guidance for ’26E of > $45bn, some $1.5bn higher than the street,” Jefferies analysts said.
The bank expects credit losses in 2026 to be roughly 40 basis points of loans and reaffirmed its goal of achieving a return on tangible equity of at least 17% through 2028, alongside revenue growth accelerating to around 5% by that time.
Adjusted pretax profit for the fourth quarter reached $8.59 billion, exceeding consensus forecasts by 9%. Banking net interest income totalled $11.7 billion, about 6% ahead of expectations, supported by higher HIBOR rates and a one-off contribution not expected to recur. Wealth management fees increased 20% year on year, while insurance income surged 49%.
Reported pretax profit for the fourth quarter rose sharply to $6.8 billion from $2.3 billion a year earlier, when results had been affected by losses linked to the disposal of the Argentina business.
HSBC’s CET1 capital ratio stood at 14.9%, 20 basis points above consensus estimates. Tangible net asset value per share increased 12% year on year to 964 cents. The board declared a fourth interim dividend of $0.45 per share, bringing total shareholder distributions for 2025 to $0.75 per share.
The bank also disclosed $500 million in base synergies linked to the Hang Seng transaction, with an additional $400 million in potential synergies targeted by 2028, associated with restructuring costs of $600 million.
Jefferies reiterated a “hold” rating on the London-listed shares with a price target of 1,120 pence. The stock last closed at 1,291 pence, equivalent to around 1.8 times spot tangible book value.
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