HSBC Q2 Earnings Call Highlights

Key Points

• HSBC reported strong first-half 2026 results: Revenue and profit before tax each rose 6% year over year to $38.2 billion and $20.4 billion, respectively, while annualized return on tangible equity reached 19.1%. The bank raised its full-year banking net interest income guidance to at least $46 billion.
• Growth remained concentrated in Asia and wealth management: Wealth fee and other income increased 21%, net new money reached $64 billion, and global wealth balances totaled $1.6 trillion. Deposits grew to $1.8 trillion and loan balances rose 6%, while HSBC maintained its expected annualized cost of risk guidance near 45 basis points.
• HSBC resumed shareholder distributions while maintaining capital strength: With a 14.1% CET1 ratio, the bank authorized up to $1 billion in share buybacks after a three-quarter pause. It also said its 2026 debt-issuance program is largely complete and reaffirmed its targets of 5% annual revenue growth and at least 17% return on tangible equity through 2028.

HSBC NYSE: HSBC reported higher revenue and profit for the first half of 2026, supported by growth in banking net interest income, wealth fees, deposits and lending, while maintaining its capital targets and largely completing its planned debt issuance for the year.

Speaking on the bank’s fixed-income investor call, Group Treasurer Fas Yousaf said first-half revenue, excluding notable items and on a constant-currency basis, rose 6% year over year to $38.2 billion. Profit before tax also increased 6% to $20.4 billion.

HSBC generated an annualized return on tangible equity of 19.1% during the period, above its full-year guidance of 17% or better. Yousaf said all four of the bank’s global businesses produced returns above 17%.

Revenue Growth and Strategic Simplification

Banking net interest income increased 5% year over year to $22.9 billion in the first half. HSBC raised its full-year guidance for banking net interest income to at least $46 billion.

The bank also cited growth in transaction banking and wealth management. Wholesale transaction banking income rose 7% year over year in the second quarter, while wealth fee and other income grew 21%. HSBC reported $64 billion in net new money during the first half, including $57 billion from Asia.

Global wealth balances reached $1.6 trillion, including $1.1 trillion in Asia, where the bank said it is the region’s largest wealth manager.

HSBC increased its target for organizational simplification savings to $2 billion. It remains on track for a separate $1.8 billion cost-reallocation target involving resources moved away from non-strategic businesses. Since the beginning of 2025, the bank has announced 15 business or market exits, according to Yousaf.

The company also outlined continued investments in digital assets and artificial intelligence. HSBC expanded its tokenized-deposit service into the United Arab Emirates during the first half and said its Orion digital-bond platform facilitated a $1.5 billion-equivalent issuance for The Hong Kong Mortgage Corporation in June.

HSBC plans to launch a Hong Kong dollar-denominated stablecoin later in 2026 following the Hong Kong Monetary Authority’s stablecoin issuer license grant in April. Yousaf said the bank is currently focused on building customer capabilities rather than estimating a potential revenue contribution from digital assets.

Deposits, Lending and Credit Quality

HSBC’s deposit base grew $129 billion year over year to $1.8 trillion, including balances classified as held for sale. Customer accounts increased by $56 billion in the first half, primarily in its Corporate and Institutional Banking division, driven by global payment services and securities services.

Loan balances increased 6% year over year, including held-for-sale balances. Yousaf said growth was broad-based, with particular strength in trade and commercial lending in the U.K. and Hong Kong.

The group recorded a $2.4 billion expected credit loss charge in the first half, equivalent to an annualized cost of risk of about 47 basis points. The second-quarter charge was 41 basis points and included $200 million related to Hong Kong commercial real estate. HSBC reiterated full-year cost-of-risk guidance of around 45 basis points.

Management said Hong Kong’s residential-property market continued to recover, with price and transaction-volume growth, while leasing in the prime office market improved. However, Yousaf said pressure remains in certain non-prime office and retail commercial real estate segments.

Greg Case, HSBC’s Head of Debt Investor Relations, said the bank’s commercial real estate risk is concentrated in a limited portion of the portfolio, particularly higher loan-to-value exposures in its substandard and credit-impaired books. He said the larger satisfactory-and-above portion of the portfolio has remained broadly stable.

On the Middle East, Yousaf said HSBC had not materially increased expected credit loss charges in the second quarter beyond the approximately $300 million charge taken in the first quarter. He described the bank’s exposures in the region as high quality and generally oriented toward international and often government-linked corporates.

Capital, Regulation and Share Buybacks

HSBC’s common equity tier 1 ratio stood at 14.1%, within its medium-term planning range of 14% to 14.5%. The bank generated 1.9 percentage points of organic capital during the first half and said its CET1 ratio was about three percentage points above its 11.2% maximum distributable amount hurdle rate.

The company announced plans to restart share buybacks, authorizing up to $1 billion after pausing repurchases for three quarters following the Hang Seng Bank privatization announcement. Yousaf said HSBC will determine future buybacks quarterly after considering dividend accruals, organic growth opportunities, potential inorganic opportunities and capital generation.

HSBC’s minimum requirement for own funds and eligible liabilities ratio was 33%, representing a 3.9-percentage-point buffer above its minimum requirement plus buffers of 29.1%.

The bank said its liquidity coverage ratio was 134%, while its 56% loan-to-deposit ratio and deposit-led funding model limited its reliance on wholesale funding.

Yousaf said U.K. proposals to adjust bank capital-buffer usability and the leverage-ratio framework are expected to have an immaterial effect at the group level. HSBC estimates a potential 10-basis-point increase in its minimum leverage requirement, which it said is not currently a binding constraint.

Issuance Program Near Completion

HSBC said its 2026 issuance program is largely complete. It issued $18 billion of senior holding-company debt against a plan of about $20 billion, with roughly $6 billion of calls and maturities remaining in the second half.

The bank has no planned Tier 2 issuance this year. It issued $4 billion of additional Tier 1 securities, completing its planned AT1 issuance, and recently announced a September call of a sterling AT1 instrument.

Yousaf said HSBC may consider pre-funding opportunities if markets are attractive, weighing carry costs and market spreads against next year’s maturities. He added that the group does not currently intend to materially increase issuance simply because spreads may be favorable.

Looking ahead, HSBC reaffirmed its targets for revenue growth of 5% year over year by 2028 and return on tangible equity of at least 17% annually through 2028, excluding notable items and specified impacts.

About HSBC (NYSE:HSBC)

HSBC Holdings plc NYSE: HSBC is a multinational banking and financial services organization headquartered in London. It traces its origins to the Hongkong and Shanghai Banking Corporation, founded in 1865 to facilitate trade between Europe and Asia, and has since grown into one of the world's largest banking groups. The company is publicly listed in multiple markets, including the London Stock Exchange, the Hong Kong Stock Exchange and as an American depositary receipt on the New York Stock Exchange.

HSBC operates a universal banking model, serving retail, commercial, corporate and institutional clients.

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