HSBC Confident Despite Decline in Net Profit In 2025

Increase in operating expenses, mainly from notable items in the third quarter, including legal provisions of $1.4 billion, the HSBC Holdings on Tuesday reported profit before tax of $7.3 billion was $1.2 billion lower compared with the same period last year.

Operating expenses of $10.1 billion were $1.9 billion or 24% higher compared with 3Q24. The increase reflected notable items, including legal provisions of $1.4 billion on historical matters, comprising $1.1 billion in connection with developments in a claim in Luxembourg relating to the Madoff securities fraud, and $300 million relating to certain historical trading activities in HSBC Bank plc.

However, this was partly offset by revenue growth, which included an increase in banking net interest income (NII) and a strong performance in wealth, while fee and other income fell in global foreign exchange and in debt and equity markets. Even profit after tax of $5.5 billion was $1.2 billion lower than in 3Q24, HSBC Holdings said.

Despite this, the bank raised its profitability outlook for 2025 even as earnings slid following an unexpected $1.1 billion provision tied to Bernard Madoff’s giant fraud case more than a decade ago, HSBC Holdings said.

HSBC Holdings Group CEO Georges Elhedery said that they were becoming a simple, more agile, focused bank, built on their core strengths. The intent with which they were executing their strategy is reflected in the bank’s performance in Q3, despite taking legal provisions related to historical matters.

“The positive progress we are making gives us confidence in our ability to upgrade our targets and we now expect 2025 RoTE excluding notable items to be mid-teens, or better. We remain fully focused on helping our customers navigate new economic realities, putting their changing needs at the heart of everything we do,” he added.

Constant currency profit before tax excluding notable items was $9.1 billion, an increase of $0.3 billion or 3% compared with Q# of 2024, as revenue growth, driven by continued strong performance in Wealth, was partly offset by a rise in operating expenses due to planned investment and inflationary impacts.

Revenue increased by $800 million or 5% to $17.8 billion compared with 3Q24. There was growth in fee and other income in Wealth in the bank’s International Wealth and Premier Banking (IWPB) and Hong Kong business segments, supported by higher customer activity, while fee and other income fell in global foreign exchange and in debt and equity markets in its Corporate and Institutional Banking (CIB) segment, from reduced client activity amid lower market volatility.

Financial Performance in 9M25

HSBC Holdings reported profit before tax decreased by $6.9bn to $23.1 billion compared with the same period last year, mainly due to an $8.2 billion y-o-y impact of notable items, including the non-recurrence of $3.6 billion in net gains in 9M24 relating to the bank’s disposals in Canada and Argentina, the recognition of dilution and impairment losses in 9M25 of $2.1 billion related to the bank’s associate Bank of Communications Co., Limited, legal provisions of $1.4 billion and restructuring and other related costs associated with organisational simplification of $800 million in 9M25. Profit after tax decreased by $6.5bn to $17.9bn compared with 9M24.

Constant currency profit before tax excluding notable items was $28 billion, an increase of $1.2 billion or 4% compared with 9M24, as higher revenue from growth in fee and other income in Wealth in our IWPB and Hong Kong businesses, and from Foreign Exchange and Debt and Equity Markets in our CIB business segment, mitigated a rise in ECL and a planned increase in operating expenses.

Revenue decreased by $2.4 billion or 4% to $51.9 billion compared with 9M24, reflecting the y-o-y impact of notable items, mainly from disposals in Canada and Argentina in 9M24.

NII of $25.6 billion increased by $1.1bn compared with 9M24, including an adverse impact of $1.5bn from business disposals in Argentina and Canada, partly offset by the favourable impact of the non-recurrence of a $300 million loss in 3Q24 on the early redemption of legacy securities.