HSBC profit rises as buybacks resume

HSBC has reported a 23% rise in first-half pre-tax profit to $19.5bn and announced the return of share buybacks as higher interest income and growth in wealth and transaction banking strengthened performance.

Profit increased from $15.8bn a year earlier and exceeded the $18.9bn average forecast among analysts. On a constant-currency basis and excluding notable items, profit before tax and revenue both grew by 6%.

HSBC plans to repurchase up to $1bn of shares, its first buyback since announcing the privatisation of Hang Seng Bank in October. The board also approved a second interim dividend of $0.10 per share.

Banking net interest income rose by $1.6bn to $22.9bn as the group benefited from the interest-rate environment and growth in customer balances. HSBC now expects banking net interest income of at least $46bn for 2026, while acknowledging that the rate outlook remains volatile.

Group chief executive Georges Elhedery said: “HSBC is becoming the stronger bank we set out to build.”

The group’s annualised return on average tangible equity reached 18.2%, or 19.1% excluding notable items. HSBC continues to target a return of at least 17% in 2026, 2027, and 2028 on the adjusted measure.

Wealth fee and other income increased to $5.5bn from $4.6bn in the first half of 2025. Wholesale transaction banking fee and other income rose to $6.1bn from $5.8bn, reflecting activity across payments, trade finance, securities services, and related corporate banking operations.

Deposits grew by $129bn, or 8%, year on year, including balances classified as held for sale. The expansion gives HSBC a substantial funding base, although the value generated from deposits will remain sensitive to interest rates, customer pricing, and competition.

The results provide early evidence of progress from HSBC’s reorganisation around four businesses: Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking. The structure is intended to concentrate accountability, simplify management, and direct investment towards areas where the group has scale.

Asia remains central to that model. HSBC’s wealth operations and cross-border network provide exposure to rising private wealth, international companies, trade flows, and customers operating between Asian, Middle Eastern, European, and American markets.

Operating across those regions also creates complexity. HSBC must manage different economic cycles, regulatory systems, geopolitical pressures, and currency movements while making its businesses work more closely together.

The group’s common equity tier one capital ratio fell by 0.8 percentage points from the end of 2025 to 14.1%. The decline reflected the Hang Seng Bank privatisation, dividends, and higher risk-weighted assets, partly offset by retained profit.

The ratio remains within HSBC’s medium-term target range of 14% to 14.5%, but the fall helps explain why capital distributions are being restarted cautiously. The proposed $1bn buyback is smaller than several programmes announced during earlier periods of surplus capital.

Notable items provided a net favourable year-on-year impact of $2.2bn to reported profit. This year’s figures included disposal losses connected with the planned sale of HSBC’s Malta business, restructuring costs, and currency-translation losses following completion of the sale of its UK life insurance operation.

The comparable period included a $2.1bn dilution and impairment charge related to HSBC’s investment in Bank of Communications, as well as higher restructuring costs. The 23% headline profit increase therefore overstates the improvement in underlying trading, although adjusted growth remained positive.

HSBC expects operating expenses to rise by about 1% this year on its target basis. Savings from simplification will need to offset investment in technology, controls, growth, and employees if management is to improve efficiency without weakening customer service or risk management.

The return of buybacks signals that restructuring is entering a phase where management expects earnings to support both investment and distributions. Continued progress will depend on wealth inflows, deposit economics, credit quality, and whether the simplified organisation produces faster decisions without creating additional operational risk.