Europe’s biggest bank, HSBC Holdings Plc HSBA.L, is starting a new share repurchase programme. Currently this will include up to $3 billion (€2.6 billion) during the first half of 2025. To illustrate, the bank’s first quarter financial report posted a stunning drop-off in revenue and profit, year-over-year. The bank thus based this decision.
During the first three months of 2025, HSBC has already raked in some $17.6 billion (€15.5 billion) in revenues. That still represents a deep cut of 26% from this time last year. The bank’s pre-tax profit was hit, coming in at €8.4 billion ($9.5 billion), a 25% decrease from a year ago. In many ways, this quarter was a challenging one for HSBC, its annualised return on average tangible equity (RoTE) hit 17.9%. This figure is a drop from the astounding 26.1% recorded in Q1’24.
HSBC’s bold moves are clearly a response to shifting market realities. The bank’s overall strategy would bring together two of its three largest divisions, resulting in only a minor impact of the combined group’s revenue — by low single-digit percentage. The bank expects about $0.5 billion (€0.44 billion) in new expected credit losses as a result of this merger. HSBC forecasts severance and other up-front costs to total approximately $1.8 billion (€1.6 billion) over the next two years.
Asia remains the bank’s biggest market by far. It does predict lending demand will be weak through 2025 due to continued uncertainty and market turmoil. The conservative forecast follows a stormy start to the month in early April. In the 30 minutes following President Trump’s announcement of reciprocal tariffs, HSBC’s share price nosedived by up to 20% at the time.
Georges Elhedery, HSBC’s Chief Financial Officer, told reporters the lender was on track to deliver a strong performance in difficult times.
“Our strong results this quarter demonstrate momentum in our earnings, discipline in the execution of our strategy and confidence in our ability to deliver our targets.” – Georges Elhedery
Despite HSBC’s leadership’s optimism, they are well aware of the economic headwinds. In short, a joint statement issued earlier this fall expressed alarm over increased uncertainty in the macroeconomic environment, especially caused by the rise of protectionist trade policies.
“The macroeconomic environment is facing heightened uncertainty, in particular from protectionist trade policies, creating volatility in both economic forecasts and financial markets and adversely impacting consumer and business sentiment.” – HSBC
HSBC’s stock has soared 7.3% year-to-date as of the European market close on Monday. The bank is still operating through challenging overall global circumstances, working on key strategic efforts to strengthen its financial position.
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