HSBC Holdings PLC shares jumped over 5% to new all-time highs on Wednesday as the bank reported a smaller decline in profits for 2025 than was forecast, and lifted its targets for medium-term income and returns.
Pre-tax profit for the year fell by 7.4% to $29.9 billion, but this was ahead of the average analyst forecast of £28.9 billion.
The profit decline was mainly due to a $4.9 billion adverse impact from 'notable items', including $2.1 billion of losses linked to its stake in China’s Bank of Communications (BoCom), $1.5 billion from the sale of its French loan book, $1.4 billion of legal provisions, including to the Bernie Madoff lawsuit, and $1.0 billion of restructuring costs.
Excluding those items and currency moves, pre-tax profit rose by about 7% to $36.6 billion. Return on tangible equity (RoTE) was 13.3%, or 17.2% on an underlying basis.
Revenue increased by roughly 4% to $68.3 billion, beating the consensus estimate of $67.4 billion, as net interest income rose 6% to $34.8 billion, while the net interest margin edged up to 1.59% from 1.56% to offset rising operating expenses due to legal and restructuring charges, investment and inflation. Credit impairments were $3.9 billion.
The CET1 capital ratio remained at 14.9%.
A fourth interim dividend of $0.45 per share meant the total dividend for 2025 was $0.75 per share.
Georges Elhedery, group chief executive, said: "2025 was a year of decisive action and swift execution, which is reflected in our strong performance. Each of our four businesses performed well and we have strong momentum across the bank."
"This is why we are raising our ambition and targeting a 17% RoTE or better, excluding notable items, in each year from 2026 to 2028."
The board also expects banking net interest income of at least $45 billion in 2026 and is maintaining its dividend payout ratio target of 50% for the next three years.
In the first hour of trading, the shares hit a new high of 1,370p, up almost 14% since the start of the year and over 50% since this time last year.
** UPDATE: Adds share price details **