HSBC Holdings plc

HSBC reported Q2 revenue of USD 19 billion, up 7% year on year, and profit before tax of USD 10.3 billion, up 13% year on year, both on a constant-currency basis excluding notable items. Q2 annualized return on tangible equity was 19.5%, and first-half annualized ROTE was 19.1%. Banking NII was USD 11.6 billion, up USD 0.8 billion year on year; Wealth fee and other income grew 21% to USD 2.8 billion; Wholesale Transaction Banking fee and other income grew 7% year on year. The Q2 ECL charge was USD 1.1 billion, equal to an annualized 41 bps of loans and advances, and CET1 was 14.1%. For balance sheet trends, deposits rose USD 46 billion in the quarter and loans rose USD 20 billion. Forward guidance: HSBC raised full-year Banking NII guidance to at least USD 46 billion, reaffirmed around 45 bps credit guidance for the full year, reiterated 2026 cost growth of around 1% versus 2025 on a target basis, reiterated a 2026 dividend payout ratio target of 50% of earnings per ordinary share excluding material notable items, and reaffirmed targets of 17% or better ROTE each year and revenue growth rising to 5% by 2028.

Georges Elhedery framed the quarter as evidence that HSBC’s strategy is working, saying momentum accelerated and all four businesses are growing with returns above the group target. He emphasized concentrating capital and investment in areas where HSBC has market leadership and structural growth, especially Hong Kong, the U.K., Wealth, and CIB. His tone was confident and disciplined, stressing that growth must stay within risk appetite and at the right returns, while citing more share buybacks, higher simplification savings, and continued AI and operating-model streamlining.

Manveen Kaur highlighted the hard numbers behind the quarter: revenue up 7% to USD 19 billion, PBT up 13% to USD 10.3 billion, Banking NII at USD 11.6 billion, Wealth fee income at USD 2.8 billion, and an ECL charge of USD 1.1 billion, or 41 bps. She said CET1 rose to 14.1% even after supporting USD 20 billion of loan growth, and that HSBC is reinstating buybacks with up to USD 1 billion while targeting a 50% dividend payout ratio for 2026. She also pointed to USD 2 billion of simplification savings, around 1% cost growth in 2026, and a modest potential cost increase from performance-related pay or accelerated investment if growth remains strong.

Analysts focused on whether HSBC is prioritizing organic growth over buybacks, how much capital will be redeployed into the business, and how sustainable the second-half NII guidance is given the Q2 run rate. Management said excess capital will first fund dividends and then organic growth, with buybacks as the preferred mechanism for remaining surplus, while stressing that lending growth must stay within risk appetite and target returns. On NII, management said the upgraded at least USD 46 billion guide reflects stronger deposits and loans, a supportive rate outlook, and reinvestment of about USD 50 billion of maturing structural hedge assets, but also includes buffers for HIBOR and FX volatility. Questions also covered higher simplification savings, cost growth, Hong Kong CRE, Middle East overlays, China cross-border rules, and Hang Seng synergies; management said the CRE trend is stabilizing, the Middle East reserve remains in place, and Hang Seng synergies are already showing up in customer acquisition.