HSBC earnings declined in the third quarter of 2025 as $1.4 billion of legal provisions outweighed revenue growth. In results released on October 28, 2025, the bank reported pre-tax profit of $7.3 billion, down $1.2 billion from a year earlier, while raising its full-year profitability outlook.

Key Takeaways

  • Reported profit fell, but constant-currency pre-tax profit excluding notable items rose 3%.
  • Wealth activity and banking net interest income supported revenue growth.
  • HSBC temporarily paused new buybacks in connection with its proposed Hang Seng Bank privatisation.

HSBC earnings reflect legal provisions

Operating expenses rose 24% to $10.1 billion. The legal provisions comprised $1.1 billion connected with developments in a Luxembourg claim relating to the Madoff securities fraud and $0.3 billion relating to historical trading activities at HSBC Bank plc.

HSBC’s third-quarter 2025 earnings announcement also identified $0.2 billion of restructuring and related costs associated with its organisational simplification. Planned investment, technology spending and inflation added to expenses, partly offset by business disposals and restructuring benefits.

The distinction between reported and underlying performance was substantial. At constant exchange rates and excluding notable items, pre-tax profit increased 3% to $9.1 billion. Reported profit after tax fell $1.2 billion to $5.5 billion.

ItemDetails
2025 credit-loss guidanceAround 40 basis points of average gross loans, including loans held for sale.
2025 expense guidanceApproximately 3% growth on HSBC’s target basis.
Medium-term capital targetCommon equity tier 1 ratio of 14%–14.5%.
2025 dividend payout target50% on HSBC’s target basis, excluding material notable items and related impacts.

Wealth and lending income support revenue

Quarterly revenue increased 5% to $17.8 billion. HSBC attributed growth partly to stronger Wealth fee and other income in its International Wealth and Premier Banking and Hong Kong businesses, supported by higher customer activity.

Banking net interest income rose 4% to $11.0 billion. However, fee and other income declined in Global Foreign Exchange and Debt and Equity Markets as lower volatility reduced client activity.

Expected credit losses remained broadly stable at $1.0 billion. Charges included Hong Kong commercial real estate exposures, a Middle Eastern exposure and a small number of UK exposures, partly offset by releases linked to a stabilising macroeconomic outlook.

Guidance improves while new buybacks pause

Chief executive Georges Elhedery said progress in executing HSBC’s strategy supported upgraded targets. The bank expected a mid-teens or better return on tangible equity for 2025, excluding notable items, and banking net interest income of $43 billion or better. These were management expectations, not completed full-year results.

HSBC completed its previously announced $3 billion buyback on October 24, 2025. It said it would temporarily refrain from initiating new buybacks in connection with its proposal to privatise Hang Seng Bank. The proposed transaction was expected to reduce its common equity tier 1 capital ratio by approximately 125 basis points on completion, subject to the required shareholder approvals.

The board approved a third interim dividend of $0.10 per share. Any decision to restart buybacks would remain subject to HSBC’s normal quarterly considerations and process.

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