HSBC (NYSE:HSBC) Shares Gap Down on Disappointing Earnings

Key Points

• HSBC shares fell sharply, opening at $85.55 versus a prior close of $91.21, after quarterly earnings missed expectations. Earnings per share were $2.10 versus the $2.20 consensus, while revenue of about $18.6 billion also came in below estimates.
• Despite the misses, third-quarter profit before tax rose 32% year over year to $9.6 billion, aided by higher net interest income, lower credit losses and cost reductions. HSBC also announced a share buyback of up to $1 billion.
• Investors remain concerned about rising funding costs as customers shift cash into higher-rate products, slower wealth-management growth and potential higher UK bank taxes. Analysts’ consensus rating is Hold, with an average price target of $97.

HSBC Holdings plc (NYSE:HSBC - Get Free Report) shares gapped down before the market opened on Tuesday following a dissappointing earnings announcement. The stock had previously closed at $91.21, but opened at $85.55. HSBC shares last traded at $85.0820, with a volume of 828,608 shares changing hands.

The financial services provider reported $2.10 earnings per share for the quarter, missing the consensus estimate of $2.20 by ($0.10). The company had revenue of $18.68 billion during the quarter, compared to the consensus estimate of $18.98 billion. HSBC had a net margin of 18.19% and a return on equity of 13.80%.

HSBC Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Friday, September 25th. Shareholders of record on Friday, August 14th were given a dividend of $0.50 per share. The ex-dividend date was Friday, August 14th. This represents a $2.00 annualized dividend and a yield of 2.3%. HSBC's dividend payout ratio (DPR) is 28.09%.

Key Stories Impacting HSBC

Here are the key news stories impacting HSBC this week:

• Positive Sentiment: Third-quarter profit before tax rose 32% year over year to $9.6 billion, supported by higher net interest income, lower expected credit losses and cost reductions. HSBC also announced a share buyback of up to $1 billion. HSBC's third-quarter profit jumps 32%, in line with estimates
• Positive Sentiment: The bank declared a third interim dividend of $0.10 per share, representing a $1.71 billion payout and reinforcing its capital-return plans. HSBC declares USD 1.71bn third interim dividend
• Neutral Sentiment: HSBC’s earnings presentation highlighted its simplification and cost-cutting strategy, while the bank continues to refine client segmentation and consider combining Hang Seng’s investment arm with HSBC’s asset-management business. These actions could improve efficiency but offer limited immediate earnings relief. HSBC Holdings plc 2026 Q3 Results Earnings Call Presentation
• Negative Sentiment: Revenue of approximately $18.6 billion came in below the $18.98 billion consensus estimate, while reported EPS of $2.10 missed expectations of $2.20. The revenue shortfall outweighed the 32% profit increase for investors. HSBC quarterly earnings report
• Negative Sentiment: Customers are moving cash into higher-rate products, increasing HSBC’s funding costs and threatening net-interest margins. Slower wealth-management growth also added to concerns about future revenue momentum. Customers are chasing higher-rate products
• Negative Sentiment: Investors are also weighing the possibility of higher UK bank taxes, while broader weakness in European banking stocks amplified the negative reaction. Higher bank tax expected in budget

Analysts Set New Price Targets

A number of research analysts have commented on the company. Erste Group Bank lowered HSBC from a "buy" rating to a "hold" rating in a report on Wednesday, July 15th. Royal Bank Of Canada reiterated a "sector perform" rating on shares of HSBC in a research note on Monday, August 17th. Deutsche Bank Aktiengesellschaft restated a "neutral" rating on shares of HSBC in a research note on Wednesday, August 5th. The Goldman Sachs Group reiterated a "buy" rating on shares of HSBC in a research report on Wednesday, August 5th. Finally, Citigroup reissued a "neutral" rating on shares of HSBC in a report on Wednesday, September 23rd. Three research analysts have rated the stock with a Buy rating, eleven have issued a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat.com, the company presently has an average rating of "Hold" and an average target price of $97.00.

Institutional Investors Weigh In On HSBC

Hedge funds have recently made changes to their positions in the stock. Bank of America Corp DE grew its holdings in shares of HSBC by 5.5% during the 1st quarter. Bank of America Corp DE now owns 2,385,883 shares of the financial services provider's stock valued at $196,811,000 after purchasing an additional 124,201 shares during the last quarter. Royal Bank of Canada grew its stake in shares of HSBC by 17.3% during the first quarter. Royal Bank of Canada now owns 1,304,192 shares of the financial services provider's stock worth $107,582,000 after buying an additional 192,133 shares during the last quarter. Quantinno Capital Management LP grew its stake in shares of HSBC by 20.9% during the first quarter. Quantinno Capital Management LP now owns 525,775 shares of the financial services provider's stock worth $43,371,000 after buying an additional 90,711 shares during the last quarter. Renaissance Technologies LLC increased its holdings in shares of HSBC by 391.6% during the first quarter. Renaissance Technologies LLC now owns 524,122 shares of the financial services provider's stock worth $43,235,000 after buying an additional 417,500 shares in the last quarter. Finally, First Trust Advisors LP increased its holdings in shares of HSBC by 1.4% during the first quarter. First Trust Advisors LP now owns 500,505 shares of the financial services provider's stock worth $41,287,000 after buying an additional 6,891 shares in the last quarter. 1.48% of the stock is currently owned by institutional investors and hedge funds.

HSBC Stock Down 6.1%

The company has a current ratio of 0.85, a quick ratio of 0.92 and a debt-to-equity ratio of 0.67. The company has a market capitalization of $293.55 billion, a P/E ratio of 12.12, a PEG ratio of 0.88 and a beta of 0.58. The stock has a 50 day moving average price of $100.05 and a 200 day moving average price of $93.17.

HSBC Company Profile

HSBC Holdings plc is a global banking and financial services company headquartered in London. Its principal subsidiary, The Hongkong and Shanghai Banking Corporation, was established in 1865 to facilitate trade between Europe and Asia. HSBC's shares trade on the New York Stock Exchange in the form of American depositary receipts under the symbol HSBC.

The company provides personal and wealth banking, commercial banking, corporate and institutional banking, investment banking, global markets, and asset management services.

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