HSBC Holdings plc 1Q 2025 Earnings Release

Georges Elhedery, Group CEO, said:

“Our strong results this quarter demonstrate momentum in our earnings, discipline in the execution of our strategy and confidence in our ability to deliver our targets. We continue to support our customers through this period of economic uncertainty and market unpredictability, which we enter from a position of financial strength.”

Financial performance in 1Q25

• Profit before tax decreased by $3.2bn to $9.5bn compared with 1Q24, primarily due to the non-recurrence of $3.7bn in net impacts in 1Q24 relating to the disposals of our banking business in Canada and our business in Argentina. Profit before tax in 1Q25 included strong performances in our Wealth business in our International Wealth and Premier Banking (‘IWPB‘) and Hong Kong business segments, and in Foreign Exchange and Debt and Equity Markets in our Corporate and Institutional Banking (‘CIB‘) segment. Profit after tax of $7.6bn was $3.3bn lower than in 1Q24.
• Constant currency profit before tax excluding notable items increased by $1.0bn to $9.8bn compared with 1Q24, as a strong performance in Wealth and in Foreign Exchange and Debt and Equity Markets was partly offset by higher expected credit losses and other credit impairment charges (‘ECL‘).
• Annualised return on average tangible equity (‘RoTE‘) in 1Q25 was 17.9%, compared with 26.1% in 1Q24. Excluding notable items, annualised RoTE in 1Q25 was 18.4%, a rise of 2 percentage points compared with 1Q24.
• Revenue decreased by $3.1bn or 15% to $17.6bn compared with 1Q24. The reduction reflected the impact of business disposals, notably in Canada and Argentina. Excluding notable items, revenue increased due to growth in Wealth in our IWPB and Hong Kong business segments, supported by higher customer activity, and in Foreign Exchange and in Debt and Equity Markets, driven by volatile market conditions. Constant currency revenue excluding notable items rose by 7% to $17.7bn.
• Net interest income (‘NII‘) of $8.3bn fell by $0.4bn compared with 1Q24, reflecting reductions due to business disposals in Canada and Argentina, and an adverse impact of $0.3bn from foreign currency translation differences. Excluding these factors, NII increased from the impact of lower interest rates on funding costs and the benefit of our structural hedge, which more than offset a reduction in asset yields, in part due to a favourable movement in our asset mix. The fall in interest rates reduced the funding costs associated with generating revenue that is recognised in ‘net income from financial instruments held for trading or managed on a fair value basis‘, arising from the deployment of our commercial surplus to the trading book. The reduction in funding costs of the trading book and the decrease in NII led to a fall in banking net interest income (‘banking NII‘) of $0.7bn or 6% compared with 1Q24.
• NII increased by $0.1bn compared with 4Q24, as the benefit of our structural hedge, the impact of lower interest rates on funding costs and a favourable movement in our asset mix were partly offset by the disposal of our business in Argentina and a lower number of days in 1Q25 than in 4Q24. The funding costs associated with the trading book decreased by $0.5bn, which resulted in a fall in banking NII of $0.4bn. Excluding the impact of foreign currency translation differences and the disposal in Argentina, banking NII was stable compared with 4Q24.
• Net interest margin (‘NIM’) of 1.59% decreased by 4 basis points (‘bps‘) compared with 1Q24, mainly due to lower interest rates. NIM increased by 5bps compared with 4Q24 as the decrease in funding costs of liabilities was larger than the reduction on asset yields.
• ECL of $0.9bn were $0.2bn higher than in 1Q24 as we increased allowances to reflect heightened uncertainty and a deterioration in the forward economic outlook due to geopolitical tensions and higher trade tariffs.
• Operating expenses of $8.1bn were stable compared with 1Q24. Growth from higher spend and investment in technology, the impacts of inflation and restructuring and other related costs associated with our organisational simplification of $0.1bn in 1Q25 were broadly offset by the impact of our disposals in Canada and Argentina. Target basis operating expenses were $7.9bn or $0.3bn higher than in 1Q24.
• Customer lending balances increased by $14bn compared with 4Q24, including favourable foreign currency translation differences. On a constant currency basis, lending balances increased by $2bn. This included growth in term lending in our CIB segment, which was broadly offset by a reduction from the reclassification of $7bn in home and other loans retained in France following the disposal of our retail banking operations to ‘financial investments measured at fair value through other comprehensive income‘.
• Customer accounts increased by $12bn compared with 4Q24, including favourable foreign currency translation differences. On a constant currency basis, customer accounts decreased by $9bn, mainly from seasonal outflows in our CIB segment, partly offset by an increase in IWPB, notably in our legal entity in Hong Kong and in HSBC Bank plc.
• Common equity tier 1 (‘CET1’) capital ratio of 14.7% decreased by 0.2 percentage points compared with 4Q24, driven by an increase in risk-weighted assets (‘RWAs‘), partly offset by an increase in CET1 capital. The increase in RWAs was mainly driven by foreign currency translation differences, asset quality and asset size movements.
• The Board has approved a first interim dividend for 2025 of $0.10 per share. On 25 April, we completed the $2bn share buy-back announced at our full-year 2024 results. We now intend to initiate a share buy-back of up to $3bn, which we expect to commence shortly after our annual general meeting on 2 May 2025 and to complete within the period before our 2025 interim results announcement.

Outlook

• The macroeconomic environment is facing heightened uncertainty, in particular from protectionist trade policies, creating volatility in both economic forecasts and financial markets and adversely impacting consumer and business sentiment. Supporting our clients through this volatile period is our top priority. The Group is well-positioned to manage the impacts of these challenges through our high-quality revenue streams, conservative approach to credit risk and strong deposit franchise.
• We continue to target a mid-teens return on average tangible equity (‘RoTE’) in each of the three years from 2025 to 2027 excluding notable items, and we continue to expect banking NII of around $42bn in 2025 based on our latest modelling, acknowledging the outlook for interest rates has become more volatile and uncertain.
• We expect ECL charges as a percentage of average gross loans of between 30bps to 40bps in 2025 (including loans held for sale balances).
• Our targeted growth in operating expenses in 2025 compared with 2024 remains approximately 3%, on a target basis. Our cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate approximately $0.3bn of cost reductions in 2025, with a commitment to an annualised reduction of around $1.5bn in our cost base expected by the end of 2026. To deliver these reductions, we plan to incur severance and other up-front costs of $1.8bn over 2025 and 2026, which will be classified as notable items.
• Given current levels of uncertainty and market turmoil, we expect demand for lending to remain muted during 2025. However, over the medium to long term we continue to expect mid-single digit percentage growth for year-on-year customer lending balances. We continue to expect double-digit percentage average annual growth in fee and other income in Wealth over the medium term.
• We intend to manage the CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target basis of 50% for 2025, excluding material notable items and related impacts.

For further information contact:

Investor Relations

UK – Neil Sankoff
Telephone: +44 (0) 20 7991 5072
Email: investorrelations@hsbc.com

Hong Kong – Yafei Tian
Telephone: +852 2899 8909
Email: investorrelations@hsbc.com.hk

Media Relations

UK – Gillian James
Telephone: +44 (0)7584 404 238
Email: pressoffice@hsbc.com

Hong Kong – Aman Ullah
Telephone: +852 3941 1120
Email: aspmediarelations@hsbc.com.hk