HSBC Profits Outperform Forecasts Despite Drop, Unveils $3bn Share Buyback

HSBC (HSBA.L) reported a fall in pre-tax profits for the first quarter of 2025 but still delivered results that exceeded market expectations. The global banking giant also revealed plans to initiate a share buyback programme worth up to $3 billion (£2.23 billion), providing a boost to shareholders.

According to figures released on Tuesday morning, HSBC’s pre-tax profits fell by $3.2 billion year-on-year to $9.5 billion. Despite the decline, this performance comfortably surpassed analysts’ forecasts of $7.8 billion, as reported by Reuters.

The bank attributed the fall in profits largely to the absence of gains from previous business disposals in Canada and Argentina, which had bolstered last year’s results. Nevertheless, HSBC highlighted robust contributions from its wealth management division and strong trading revenues across foreign exchange (forex), debt, and equity markets.

HSBC’s Financial Highlights

• Profits after tax dropped by $3.3 billion to $7.6 billion for the first three months of the year.

• Net interest income (NII) — the difference between interest earned from borrowers and paid to savers — slipped by $0.4 billion to $8.3 billion.

• Revenue decreased by 15% year-on-year, totalling $17.6 billion.

Despite these figures, HSBC confirmed a first interim dividend of $0.10 per share and announced that its $3 billion share buyback would commence shortly after the annual general meeting on 2 May, concluding before the release of interim results later this year.

Economic Challenges Ahead

In its forward-looking statement, HSBC warned that heightened global economic uncertainty — particularly due to protectionist trade policies — could cause increased volatility across financial markets, impacting consumer and business sentiment.

Chief Executive Georges Elhedery, speaking on the earnings call, noted that in a “plausible downside tariff scenario,” HSBC estimates a low single-digit percentage impact on group revenues. However, he emphasised the bank’s readiness to navigate potential economic headwinds.

Operating expenses remained steady at $8.1 billion compared with the same period in 2024, demonstrating continued cost discipline.

HSBC’s Strategic Restructure

Following a major strategic overhaul introduced by Elhedery last October, HSBC’s operations have been streamlined into four main divisions: Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking. The restructure aims to eliminate duplicated processes and accelerate decision-making across the organisation.

Looking ahead, HSBC is targeting $300 million in cost savings during 2025, with a broader ambition to achieve an annualised $1.5 billion reduction by the end of 2026.

Analyst Commentary

Matt Britzman, Senior Equity Analyst at Hargreaves Lansdown, described HSBC’s first-quarter performance as a “strong start to the year,” noting that while the sale of businesses in Canada and Argentina distorted year-on-year comparisons, the core business showed impressive resilience.

“For investors, a diverse income base is key in today’s unpredictable economic climate,” Britzman said. “HSBC’s global exposure presents certain risks if trade tensions escalate, but the bank’s stability across different sectors offers reassurance.”

“Keeping full-year guidance unchanged after such a solid quarter underlines HSBC’s confidence, even in the face of a challenging macroeconomic backdrop,” he added.

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