HSBC has adjusted a central profitability target upward after publishing annual results that outperformed market expectations even as pretax profit fell. The bank said pretax profit slipped 7% to $29.9 billion last year, weighed down by $4.9 billion of exceptional charges, but that outcome was roughly $1 billion ahead of consensus forecasts.
In announcing the results, Chief Executive Georges Elhedery said the bank took decisive action during the period and is emerging as "a simple, more agile, focused bank built for a fast-changing world." Management highlighted that most elements of its planned overhaul are now complete and that it is positioning the firm for further growth.
Earnings and targets
HSBC is raising its target for return on tangible equity (ROTE), a closely watched profitability metric in banking, to "17% or better" through 2028. That marks an increase from the previous goal of achieving "mid-teens" ROTE for the three years through 2027. The bank reported ROTE of 13.3% for the most recent year.
Following the results, HSBC's Hong Kong-listed shares climbed 2.5%.
One-off charges and China exposure
The $4.9 billion of exceptional items included a $2.1 billion write-off linked to HSBC's holdings in China’s Bank of Communications, a position the lender said had been affected by dilution and the prolonged downturn in China’s property market. That write-down contributed to a sharp fall in pretax profit for the bank's mainland China operations, which tumbled 66% to $1.1 billion.
Other notable non-recurring items included $1.4 billion of legal provisions and $1 billion of restructuring and related costs.
Strategic overhaul and cost discipline
Elhedery, a long-serving HSBC executive who has led the bank for about one and a half years, has driven a strategic reorientation of the group. His programme of change reorganised the bank’s operating structure along East-West lines, removed sub-scale investment banking units in the U.S. and Europe, and reduced the number of senior managers. Management recorded 11 business exits across global operations during the year.
Those moves coincided with a sharp rebound in investor sentiment: HSBC's London-listed stock rose about 50% in 2025 and added another 10% year-to-date, bringing market capitalisation to roughly $300 billion.
Hang Seng integration and expected synergies
Last year HSBC took Hang Seng Bank private in a transaction valued at $13.7 billion. The bank told investors it expects the combined operations to deliver $900 million of pretax revenue and cost synergies by the end of 2028, while incurring around $600 million of restructuring charges related to the integration.
Dividends, pay and investor focus
HSBC proposed a final dividend of 45 cents per share, adding to an earlier 30 cents paid during the year. The total for the year therefore falls short of the 87 cents distributed in 2024. Elhedery’s total remuneration for 2025 was 6.6 million pounds ($8.9 million), an 18% increase from the prior year. The results release included the exchange conversion used for that figure: $1 = 0.7395 pounds.
Analysts at Jefferies noted that while the stronger-than-expected results should be well received by investors, some may question HSBC’s plan for costs to rise by only 1% in 2026, given the competitive environment and the bank’s need to invest in technology and capabilities.
Investor tools and screening
Investment services that evaluate individual stocks have highlighted HSBC as part of broader screening processes tracking fundamentals, momentum and valuation. Such services use many metrics to compare HSBC to thousands of other companies when assessing risk and reward.
Overall, HSBC’s results reflect a mixed picture: the headline profit number fell year-on-year due to several large, one-off items, yet the group beat analyst expectations, raised profitability targets and laid out how recent strategic moves - including the Hang Seng deal - should lift future returns.