HSBC HOLDINGS PLC

Recommendation history

• H1 2026BuyBuy: HSBC delivered a strong, broad-based H1 with revenue of $38.2bn (+6%), PBT of $20.4bn (+6%), 19.1% annualised ROTE and 1.9% organic CET1 generation; banking NII guidance was raised to at least $46bn for FY2026. The main tension is capital distribution: the $1bn buyback was below some analyst expectations and management would not lower its 14%-14.5% CET1 target, but the balance sheet remains highly resilient with a 14.1% CET1 ratio, 134% LCR, 56% loan-to-deposit ratio and reiterated 45bp FY2026 cost-of-risk guidance.
• 2026-06-03HoldHSBC’s strategic setup remains attractive but the call did not provide enough new earnings evidence to justify buying aggressively: Wealth is 25% of group revenue with $1.6 trillion of balances, including more than $1 trillion in Asia, while the UK generates $19 billion of annual revenue and Hong Kong offers potential Hang Seng synergies after the $14 billion privatization. The structural case—Asia connectivity, cross-border wealth and a large deposit franchise—is credible, but management gave no quantified targets or incremental financial outlook, and its confidence that mainland China real estate is “mostly behind us” remains the key downside risk.
• FY 2025BuyBuy: HSBC delivered 2025 revenue growth of 5%, record profit before tax of $36.6 billion and 17.2% ROTE, while guiding for banking NII of at least $45 billion in 2026 and 17%+ ROTE through 2028. The investment case is supported by deposit growth, Wealth momentum, 1% 2026 cost growth and a 50% payout target, but the Hang Seng thesis still depends on executing $900 million of benefits, including a less-certain $400 million upside bucket, while buybacks are suspended for up to three quarters.
• Q3 2025BuyBuy: HSBC delivered a strong Q3, with revenue up 3% to $17.9 billion, PBT of $9.1 billion and year-to-date annualised ROTE of 17.6% excluding notable items. Management upgraded 2025 banking NII to $43 billion or better and ROTE to mid-teens or better; the main offsets are three quarters without buybacks, uncertain Hang Seng integration benefits, ongoing Hong Kong CRE stress and potentially material Madoff litigation exposure.
• Q1 2026BuyBuy: HSBC delivered a broad-based Q1 with 4% revenue growth to $19.1bn, $10.1bn adjusted PBT and 18.7% annualised ROTE, while upgrading Banking NII guidance to around $46bn. The key tension is credit: Q1 ECL was 52bps, including a $0.4bn fraud-related charge and $0.3bn Middle East reserve, with FY guidance raised to around 45bps; nevertheless, strong capital generation, wealth momentum and targeted cost savings support the 17%+ ROTE targets.