HSBC has reported profit before tax of $9.5bn the first quarter of 2025 (Q1 2025), marking a 25.2% decrease, or $3.2bn, compared to the same period in the previous year.
This decline is largely due to the absence of one-time gains amounting to $3.7bn from the disposal of HSBC’s banking operations in Canada and Argentina recorded in Q1 2024.
Profit after tax for Q1 2025 was reported at $7.6bn, down by $3.3bn from Q1 2024.
On a constant currency basis, excluding notable items, the profit before tax increased by $1bn to $9.8bn. This rise was driven by robust activity in Wealth and Foreign Exchange, although it was somewhat offset by increased expected credit losses and other credit impairment charges.
HSBC’s annualised return on average tangible equity was recorded at 17.9% for Q1 2025, compared to 26.1% in the previous year. When excluding notable items, the return stood at 18.4%, showing a 2 percentage point increase from Q1 2024.
Revenue saw a decline of $3.1bn or 15%, reaching $17.6bn for the quarter. This reduction was primarily due to the impact of prior business disposals.
However, excluding notable items, revenue experienced growth, attributed to heightened customer activity in Wealth and increased activity in Foreign Exchange and Debt and Equity Markets, driven by market volatility.
On a constant currency basis, revenue, excluding notable items, grew by 7% to $17.7bn.
Net interest income (NII) fell by $400m to $8.3bn, influenced by business disposals and a $0.3 billion impact from foreign currency translation differences. Nonetheless, after excluding these factors, NII increased due to lower interest rates on funding costs and benefits from a structural hedge, which offset the decline in asset yields.
The net interest margin declined by 4 basis points to 1.59% year-on-year but improved by 5 basis points from the previous quarter.
Expected credit losses rose by $200m to $900m, reflecting adjustments for increased economic uncertainty and a worsening economic outlook.
Operating expenses remained steady at $8.1bn, with increased spending on technology and restructuring costs balanced by the effects of previous business disposals.
Customer lending balances increased by $14bn, including positive foreign currency translation differences, and by $2bn on a constant currency basis.
The common equity tier 1 (CET1) capital ratio decreased by 0.2 percentage points to 14.7%, affected by an increase in risk-weighted assets.
HSBC’s outlook indicates anticipation of ongoing economic uncertainty driven by protectionist trade policies and market volatility.
The bank aims for a mid-teens return on average tangible equity from 2025 to 2027, excluding notable items. It expects expected credit losses to range between 30 to 40 basis points of average gross loans in 2025 and forecasts a 3% growth in operating expenses.
HSBC plans to maintain its CET1 capital ratio within a target range of 14% to 14.5% and aims for a dividend payout ratio of 50% for 2025.
HSBC Group CEO Georges Elhedery 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.”
