HSBC (LSE:HSBA) reported stronger-than-expected first-half earnings after higher net interest income and robust wealth management activity helped lift profitability. The banking group also announced the return of its share buyback programme, authorising the repurchase of up to $1 billion of shares.
Higher Income Drives Strong Profit Growth
Pretax profit for the first six months of the year rose 23% to $19.5 billion, compared with $15.8 billion in the same period last year. The result exceeded the consensus forecast of $18.9 billion compiled by HSBC from broker estimates.
The bank said the improvement was driven by stronger banking net interest income, higher fee and other income, particularly from its Wealth and Wholesale Transaction Banking businesses, as well as a favourable contribution from notable items.
Revenue increased 16% year-on-year, supported by a one-off gain of $1.3 billion from notable items, which included the impact of costs associated with a $200 million restructuring programme.
Margins Improve as Costs Decline
Second-quarter net interest income increased 9% to $9.29 billion, while operating expenses fell 2% compared with the previous year, reflecting lower restructuring costs.
Net interest margin improved by four basis points to 1.61%, and annualised return on tangible equity (RoTE), excluding notable items, reached 19.1% for the quarter.
Shareholder Returns and Financial Guidance
HSBC confirmed it will resume its share buyback programme with a new repurchase plan worth up to $1 billion, marking its first buyback since taking Hong Kong lender Hang Seng Bank private.
Looking ahead, the bank expects banking net interest income of at least $46 billion during 2026 and continues to forecast operating expense growth of around 1% for the year.
Management also reaffirmed its target of achieving a return on tangible equity of 17% and said it intends to maintain its CET1 capital ratio within its medium-term target range of 14% to 14.5%.
CEO Highlights Continued Customer Growth
Chief Executive Georges Elhedery said the group attracted 640,000 new customers in Hong Kong during the first half of the year despite tighter regulatory measures by Chinese authorities aimed at offshore wealth management.
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