HSBC profit jumps 32% to $9.6 billion despite share slide
Key Facts
HSBC reported a 32% rise in third-quarter profit before tax to $9.6 billion, up $2.3 billion from the same period in 2025, according to its results statement issued on October 27. Profit before tax excluding notable items and on a constant-currency basis was $10 billion, up $0.9 billion year on year. Revenue also rose by $0.8 billion to $18.6 billion, while reaching $18.7 billion excluding notable items and on a constant-currency basis. Revenue fell short of analysts’ estimates of $19 billion, according to Reuters coverage. The shares fell after the results, as lower-than-expected revenue and slower wealth business growth weighed on the stock.
The revenue breakdown showed growth in interest income, with net interest income at $9.3 billion, up $0.5 billion or 6% compared with the third quarter of 2025. Banking interest income rose by $0.6 billion to $11.7 billion. HSBC attributed the increase in net interest income to higher deposit balances and the benefit of reinvesting structural hedges at higher yields. This was partly offset by lower interest income in Markets Treasury, as well as a one-off negative impact of $0.1 billion in the third quarter. Net interest margin was 1.57%, unchanged from the same period a year earlier.
Improved adjusted profitability coincided with lower expected credit losses, which fell to $0.8 billion, down $0.2 billion or 17% from the third quarter of 2025. The bank said the decline mainly reflected a $0.1 billion reduction in Stage 3 charges related to commercial real estate in Hong Kong. It also cited lower charges in the UK, international wealth businesses and Mexico’s premier banking business. Annualised return on average tangible equity was 17.7%, compared with 12.3% a year earlier. It rose to 18.2% excluding notable items.
By contrast, reported profit benefited from a favourable accounting impact on operating expenses. Expenses were $8.8 billion, down $1.3 billion or 12% from the third quarter of 2025, including a favourable net impact of $1.4 billion from notable items. HSBC said the impact mainly reflected the non-recurrence of legal provisions of the same amount recorded in the year-earlier period. The net impact of these items on profit before tax was $1.4 billion. The comparison between reported profit and profit excluding notable items shows that the quarter’s results included non-recurring factors alongside improved adjusted profitability.
Group Chief Executive Georges Elhedery said HSBC’s simplification is intended to expand its capacity to invest and grow and deliver returns to shareholders. He added: "As we simplify HSBC, we are creating greater capacity to invest and grow and deliver strong returns for our shareholders." The board declared a third interim dividend for 2026 of $0.10 per ordinary share. The bank also said it intends to launch an additional share buyback programme of up to $1 billion. HSBC expects to complete the programme by the announcement of its full-year 2026 results, scheduled for February 23, 2027.
HSBC maintained its forecast for banking interest income of at least $46 billion in 2026. The guidance comes amid third-quarter growth in net interest income, with net interest margin stable year on year. After the results, shares listed in Hong Kong fell 5.56% to HK$134.30, after touching HK$132.60, their lowest level since April 2. Shares listed in London also fell about 7% in Tuesday trading. Revenue was $18.62 billion, according to market data, below analysts’ estimate of $19 billion, while coverage said slower growth in the wealth business weighed on the stock.