HSBC lifts earnings target, annual profit dips but beats estimates

By Selena Li and Lawrence White

HONG KONG, Feb ‌25 (Reuters) - HSBC Holdings ​lifted a ​key earnings target after its annual profit beat expectations, a decision which reflects that most of the bank's planned overhaul has now been completed and further growth is in its sights.

Buffeted by $4.9 ‌billion in one-off charges, Europe's largest lender's pretax profit slipped 7% to $29.9 billion last year. ⁠That was, however, about $1 billion ahead of a consensus forecast and comes after an unusually strong 2024.

Chief Executive Georges Elhedery said in a ‌statement that the bank had acted decisively ‌last year.

"We are becoming a simple, more agile, focused bank built for a fast-changing world."

HSBC said it was raising its target for return on tangible equity, a key measure of profitability for banks, to "17% or better" ​through 2028, up from its "mid-teens" target set for the three years through 2027. Last year, it came in at 13.3%.

The bank's Hong Kong-listed shares rose 2.5% after the results.

A RAFT OF ONE-OFF CHARGES

Charges incurred last year ⁠included a $2.1 billion write-off related to its holdings in China's Bank of Communications which had been hurt by dilution and the long downturn in China's property ​sector.

That led to pretax profit for its mainland China business tumbling 66% to $1.1 billion.

The bank also logged legal provisions worth $1.4 billion as well as $1 billion of restructuring and related ​costs.

Elhedery, a career HSBC veteran, has shaken up the bank ‌since assuming the chief executive role one and a half years ago by reorganising operating divisions along East-West lines, shedding sub-scale investment banking units in the U.S. and Europe, ⁠and slashing the ranks of senior managers.

All in all, the bank initiated 11 exits from various businesses across the globe last year.

Those efforts helped the bank's London-listed stock surge 50% in 2025 and it has climbed another 10% for the year to date ⁠to give the bank a market value of some $300 billion.

HANG SENG SYNERGIES AND COSTS

HSBC took subsidiary Hang Seng Bank private in a $13.7 ​billion deal last year. It said on Wednesday that their combined banking operations would target $900 million in pretax revenue and cost synergies by the end of 2028, but there would also be some $600 million restructuring costs.

The bank also said it would pay a final ‌dividend of 45 cents a share, adding to 30 cents granted earlier in the year. That was, however, below the 87 cents paid in total for 2024.

Elhedery received ‌6.6 million pounds ($8.9 million) in total remuneration in 2025, up 18% from a year earlier.

Analysts at Jefferies said investors were likely ⁠to welcome the strong results but may ‌question its forecast of just a ​1% rise in costs for 2026 given the competitive environment and need to invest in AI technology.

($1 = 0.7395 pounds)

(Reporting by Selena Li in Hong Kong and Lawrence White in London; Editing by ‌Edwina Gibbs)

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