HSBC (HSBA) Q1 2025 earnings summary

Executive summary

• Profit before tax rose 11% year-over-year to $9.5bn ($9.8bn excluding notable items), with annualized ROTE at 18.4% excluding notable items, despite a reported decline due to non-recurrence of prior year disposal gains.

• Announced up to $3bn share buyback and $0.10 per share interim dividend, with buyback to commence post-AGM.

• Wealth business delivered fifth consecutive quarter of double-digit growth, with $22bn net new invested assets and over 300,000 new-to-bank customers in Hong Kong.

• Strong performance in transaction banking, FX, equities, and debt trading, driven by higher client activity and volatility.

• Maintained disciplined cost management and organizational simplification, reallocating costs to growth areas.

Financial highlights

• Revenue excluding notable items reached $17.7bn, up $1.1bn or 7% year-over-year, driven by fee and other income; total revenue fell 13–15% due to prior year disposal gains.

• Banking NII run rate remained stable quarter-on-quarter, with expectation of around $42bn in 2025.

• ECL charge was $0.9bn (28–37bps of loans), including $150m for heightened economic uncertainty.

• CET1 ratio at 14.7%, within target range, with deposits up 6% year-over-year.

• Operating expenses were stable at $8.1bn; cost growth target is ~3% for 2025.

Outlook and guidance

• Reaffirmed guidance for mid-teens ROTE (excluding notable items) for 2025–2027.

• Banking NII expected to be around $42bn in 2025, with ECL charges at 30–40bps of average gross loans.

• Cost growth targeted at ~3% in 2025, with $0.3bn simplification savings and $1.8bn in severance/upfront costs over 2025–2026.

• CET1 ratio to be managed within 14–14.5% range; dividend payout ratio targeted at 50% of EPS excluding material notable items.

• Lending demand expected to remain muted in 2025; medium-term guidance for mid-single digit lending growth and double-digit Wealth fee income growth.