HSBC Holdings PLC Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
HSBC Holdings PLC's Q3 2025 earnings call highlighted strong financial performance, driven by revenue growth and positive momentum in key business segments like Wealth and Wholesale Transaction Banking. The call also addressed strategic initiatives, including the proposed privatization of Hang Seng Bank, and provided updated financial guidance for 2025.
Key Financial Results
Total revenues grew by $500 million to $17.9 billion.
Annualized RoTE was 16.4% in the third quarter and 17.6% year-to-date, excluding notable items.
Profit before tax was $9.1 billion.
Customer deposit balances stand at $1.7 trillion.
CET1 capital ratio is 14.5%.
Banking NII of $11 billion this quarter.
Business Segment Results
Each of the four businesses returned greater than mid-teens annualized RoTE.
Wealth saw 29% growth in fee and other income.
Wholesale Transaction Banking's performance of $1.3 billion was strong.
Securities Services, fee and other income grew 15%.
Private Banking grew 8% and Asset Management 6%, respectively.
Investment Distribution also performed very well, up 39%, reflecting strength in our customer franchise in Hong Kong.
Capital Allocation
Targeting a dividend payout ratio for 2025 of 50% of earnings per ordinary share, excluding material notable items and related impacts.
No share buybacks are expected for the next three quarters, dependent on underlying capital generation, due to the Hang Seng offer.
Industry Trends and Dynamics
HIBOR has recovered.
Deposit growth continues.
Interest rates: the Fed is still cutting.
Hong Kong retail sales have grown since May and are up 4% year-on-year in August.
Increase in year-to-date tourist arrivals of 12% year-on-year in Hong Kong.
Slight uptick for take-up for Grade A office space in Hong Kong.
Competitive Landscape
Acquiring a business with structurally high pre-impairment margins.
The strength of HSBC's franchise has been validated in a range of economic and tariff situations.
HSBC has a preeminent position and strength in Hong Kong, which is a key driving force for deposit growth.
Macroeconomic Environment
Lower currency volatility impacted FX performance.
Discussion around the US dollar rate curve being a headwind.
Normalization of probabilities given to upside, downside and base-case scenarios has resulted in some modest releases of ECLs.
Growth Opportunities and Strategies
Intention to privatize Hang Seng Bank to create greater alignment for better operational leverage and efficiencies.
Potential for additional revenue through expanded capital market products to Hang Seng commercial clients and wealth products to its affluent clients.
Simplifying and streamlining decision-making processes, improving operational risk management and better aligning operations.
Exiting non-strategic activities to redeploy costs where they are not.
Investing costs released from exits into priority growth areas at accretive returns.
New non-resident customers are seen as a significant and long-dated opportunity for the bank.
Wealth is not just a Hong Kong story, it runs across the Asian franchise with double-digit fee and other income growth in Singapore, Mainland China, and other markets.
Financial Guidance and Outlook
2025 banking NII to $43 billion or better.
2025 RoTE excluding notable items to be mid-teens or better.
On track to achieve target of around 3% cost growth in 2025 compared to 2024 on a target basis.
Full ECL guidance of around 40 basis points retained.
Expect $0.4 billion simplification savings to be realized in the full-year 2025 P&L.
