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HSBC Reports Strong Earnings Despite Decline in Q1 2025 Profits

Prime Highlights:

  • HSBC Q1 2025 pre-tax profit fell 25% to $9.5 billion but surpassed expectations.
  • It raised bad loan provisions to $876 million as economic uncertainty and trade tensions pressured it.

Key Facts:

  • Net interest income fell to $8.3 billion after it shut its Argentine unit.
  • HSBC also indicated a $3 billion share repurchase and a $0.10-per-share payout.

Key Background:

HSBC Holdings plc posted a quarter-on-quarter decline of 25% in pre-tax profit to $9.5 billion in Q1 2025. It exceeded analysts’ expectations of profit of $7.8 billion. The decline was led widely by the disposal of the bank’s business in Argentina, thus its net interest income to decline to $8.3 billion. In addition, the bank’s net interest margin also declined slightly in the quarter to assist in lowering the overall decline in profits.

To cover more economic uncertainties and broader implications of trade tensions, HSBC strategically added $202 million extra bad loan provisions to $876 million for the quarter. $100 million of which in particular was set aside in respect of exposure to the Hong Kong commercial property market. The lender warned that the rest of this year will be experiencing hard economic conditions and is expecting flat lending demand. Apart from that, HSBC also aims to be able to add an additional $500 million to its loan loss provisions, in the event of further tariff increases. In the meantime, HSBC remains committed to returning shareholder value.

In the first quarter, the bank announced a dividend payout of $0.10 per share and also launched a $3 billion share buyback program. HSBC is trimming expenses in an effort to shave $1.5 billion annually by 2026 under new chief Georges Elhedery, who took the helm in September 2024. The lender is continuing also to restructure, including German sales, South Africa, France, and Malta. HSBC also anticipates its majority holding in China’s Bank of Communications will fall from 19% to 16% and hence record a paper loss of up to $1.6 billion. Going forward, HSBC remains committed to streamlining operations and boosting profitability despite resistance from worldwide economic headwinds.