HSBC has posted annual pre-tax profits of $29.9bn, outperforming market expectations despite significant write-downs in its Chinese operations. The bank’s performance has paved the way for a $3.9bn bonus pool, the largest in more than ten years, signaling strong confidence in its current trajectory. While the profit was lower than 2024’s record high, it remained $1bn above what most analysts had predicted for the 2025 fiscal year.
The downturn in the Chinese property sector was a primary obstacle, leading to a 66% drop in profits for the bank’s mainland China business. Specifically, the lender took a $2.1bn hit on its holdings in the Bank of Communications. Despite these regional struggles, the bank’s global diversification and its massive profits in other Asian sectors helped offset the losses and maintain a healthy balance sheet.
CEO Georges Elhedery described the bank’s evolution into a “simple, more focused” entity as the primary reason for its resilience. Under his leadership, HSBC has moved away from smaller, less profitable investment units in the West to concentrate on its “east-west” banking lines. This strategy helped the bank’s stock rise by 50% last year, rewarding shareholders even as dividend payouts saw a slight decrease.
Looking ahead, the bank has updated its financial goals, aiming for a 17% return on tangible equity by 2028. This represents a significant step up from previous targets and reflects the efficiency gains made during the recent overhaul. To support these goals, the bank expects to see hundreds of millions in synergies following the privatization of Hang Seng Bank.
Market experts at Jefferies have pointed out that while the current results are strong, the bank faces a competitive 2026. The need to invest heavily in AI and other digital infrastructure may clash with the bank’s forecast of limited cost increases. However, with the restructuring phase largely behind them, leadership remains optimistic about navigating these future challenges.