Bank’s half-year profits miss forecasts; CEO signals further changes
HSBC Holdings has reported a larger-than-anticipated decline in first-half profit, citing impairment charges linked to its exposure to a Chinese bank and Hong Kong property sector, while continuing with a global overhaul of its operations.
The banking group posted a 26% drop in pre-tax profit for the first six months of the year, reflecting ongoing difficulties in China, a market that has become increasingly central to HSBC’s growth strategy following a retreat from Western markets.
Profit for the period reached $15.8 billion (£12.3 billion), falling short of analysts’ expectations of $16.5 billion (£12.9 billion). Shares in HSBC declined by 4.5% in London, mirroring earlier losses in Hong Kong.
Group chief executive Georges Elhedery, who initiated a major restructuring after taking the helm last year, said the bank has begun reviewing its retail banking operations in Australia, Indonesia, and Sri Lanka.
The bank also plans to wind down its retail business in Bangladesh during the second half of the year. Elhedery noted that the bank’s corporate and institutional banking divisions remain unaffected by these changes.
Impairment losses related to BoCom, HSBC’s Chinese banking partner, contributed to a 29% decrease in group profit before tax, which fell to $15.8 billion (£11.8 billion).
In the UK, HSBC’s ring-fenced subsidiary reported mortgage growth of £2.6 billion ($3.3 billion) in the first half, driven in part by increased lending balances.
HSBC UK’s financial results showed a 7% year-on-year decline in profit before tax to £2.5 billion ($3.2 billion). Revenue for the UK business rose by 4% to £4.6 billion ($5.8 billion), while net interest income increased by 6% to £3.9 billion ($4.9 billion), despite lower interest rates. Total customer lending across HSBC UK grew by £5.9 billion ($7.4 billion) over the period.
“Looking ahead, with firm foundations in place, clarity in our strategy, discipline in our execution and dynamism in our culture, momentum continues to build,” Elhedery said. “We are confident in our ability to deliver against our targets, including a mid-teens RoTE, excluding notable items, for 2025, 2026 and 2027.
“We are working towards achieving our ambition of becoming the most trusted bank globally, putting customers at the heart of everything we do. By doing this, we remain focused on generating strategic growth and delivering attractive returns.”
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