HSBC (NYSE:HSBC) reported stronger second-quarter momentum, with revenue rising 7% year over year on a constant-currency basis to $19 billion and profit before tax increasing 13% to $10.3 billion, excluding notable items. The bank posted an annualized return on tangible equity of 19.5% for the quarter and 19.1% for the first half.
Group CEO Georges Elhedery said the first-half results supported HSBC’s confidence in its strategy and medium-term targets. For the six months, revenue and profit before tax each rose 6%, while deposits increased by $129 billion, or 8%, year over year including held-for-sale balances. The deposit base stood at $1.8 trillion, while loans increased by $55 billion, or 6%.
Revenue growth broadens across businesses
Chief Financial Officer Pam Kaur said all four of HSBC’s businesses increased revenue in the quarter, and each generated annualized return on tangible equity above the group’s target of at least 17%, excluding notable items.
Banking net interest income increased $0.8 billion year over year to $11.6 billion, supported by deposit and loan growth. HSBC raised its full-year banking net interest income guidance to at least $46 billion, citing balance-sheet growth, a favorable interest-rate outlook and reinvestment of maturing structural hedge assets.
Wealth fee and other income increased 21% in the second quarter to $2.8 billion. Growth was led by investment distribution, which rose 26%, along with insurance, private banking and asset management income. Second-quarter net new money totaled $25 billion, including $22 billion from Asia.
For the first half, wealth fee and other income rose 18% to $5.5 billion, while global net new money reached $64 billion. Asia accounted for $57 billion of that total, a 32% increase from a year earlier. Elhedery said HSBC managed $1.1 trillion in wealth balances in Asia and that revenue from wealth relationships represented around one-quarter of group revenue.
Wholesale Transaction Banking fee and other income increased 7% in the quarter, accelerating from 2% growth in the first quarter. Security services revenue grew 16%, trade income rose 7%, payments increased 6%, and foreign-exchange income rose 5%. Trade balances were up 29% year over year.
Loan and deposit momentum in Hong Kong and the U.K.
HSBC added $46 billion in deposits during the second quarter and $20 billion in loans. Corporate and Institutional Banking deposits rose $42 billion in the quarter, although Kaur said about half of that increase was large and short term. She cited momentum in global payment services, new securities-services mandates and Hong Kong corporate inflows.
Elhedery said loan demand had improved in Hong Kong after several quarters of contraction or flat growth, while the U.K. continued to provide strong lending growth. In the first half, commercial lending in the U.K. increased by $10 billion, or 10%, and mortgages rose by $10 billion, or 5%.
In Hong Kong, HSBC increased wealth balances by 10% year over year to $0.5 trillion. The bank added 640,000 personal banking customers and 24,000 business banking customers. Elhedery also pointed to early benefits from the Hang Seng Bank privatization, saying Hang Seng nearly doubled quarterly new-customer acquisition to about 60,000 after adopting HSBC’s digital onboarding capabilities.
HSBC expects approximately $500 million in reported synergies from the Hang Seng transaction, plus $400 million in related benefits, over roughly three years. Elhedery said more than 80% of the related execution workstreams were live.
Cost savings target increased, investment plans accelerated
HSBC raised its organizational simplification savings target to $2 billion, from a prior target of $1.5 billion. The bank said it had already actioned $1.7 billion in savings, with associated restructuring costs of $1.4 billion, below the initially expected amount.
The additional savings are expected to be actioned before the end of 2026 and delivered fully in 2027. HSBC plans to use its initially committed $1.8 billion restructuring-cost envelope to achieve the higher savings target.
Second-quarter costs rose 1% year over year, and the bank maintained its target for approximately 1% cost growth in 2026 compared with 2025. Kaur said HSBC may consider additional performance-related pay if strong business performance continues, which could modestly increase costs. The bank also said it may accelerate investments in growth initiatives during 2027, with simplification savings and cost reallocations from divestments providing a partial offset.
Since 2025, HSBC has announced 15 business or market exits, including the sale of its Singapore insurance business, its Australia retail-business exit and the sale of its Egypt retail banking business. Management said these actions are intended to redirect investment toward areas where HSBC holds leadership positions and expects higher returns.
Credit outlook and capital priorities
HSBC recorded a second-quarter expected credit loss charge of $1.1 billion, equal to an annualized 41 basis points of loans and advances. The bank reiterated full-year credit guidance of around 45 basis points. The quarterly charge included $0.2 billion of additional Stage 3 charges related to Hong Kong commercial real estate.
Kaur said Hong Kong residential property markets had recovered and that prime office conditions had improved, though pressure remained in parts of the office and non-core retail markets. HSBC retained a $300 million reserve built during the first quarter related to the Middle East, while saying actual credit losses in the region had been limited.
HSBC’s CET1 capital ratio rose to 14.1%, up 10 basis points from the first quarter after supporting $20 billion of loan growth. Elhedery said capital allocation priorities are first to fund the bank’s dividend, then support organic business growth at appropriate returns and within its risk appetite, with excess capital distributed through buybacks.
The bank reiterated its targets for revenue growth to rise to 5% year over year by 2028 and for return on tangible equity of at least 17% in each of 2026, 2027 and 2028, excluding notable items.
About HSBC (NYSE:HSBC)
HSBC Holdings plc (NYSE: HSBC) is a multinational banking and financial services organization headquartered in London. It traces its origins to the Hongkong and Shanghai Banking Corporation, founded in 1865 to facilitate trade between Europe and Asia, and has since grown into one of the world’s largest banking groups. The company is publicly listed in multiple markets, including the London Stock Exchange, the Hong Kong Stock Exchange and as an American depositary receipt on the New York Stock Exchange.
HSBC operates a universal banking model, serving retail, commercial, corporate and institutional clients.
