- Record Profit and Revenue Growth Profit before tax rose 7% to $36.6 billion, with revenues up 5% in 2025.
- Strategic Cost Savings Achieved 3% cost growth, on track to deliver $1.5 billion annualized simplification savings by mid-2026.
- Hang Seng Privatization Synergies Completed $13.7 billion acquisition, unlocking $0.9 billion in synergies ($0.5 billion cost, $0.4 billion revenue).
- Deposit and Wealth Growth Customer deposits reached $1.8 trillion (+$78 billion Q4), while Wealth fee income surged 20% to $2.1 billion.
- 2026-2028 Targets Aims for 5% revenue growth by 2028, 17%+ RoTE, and 50% dividend payout ratio, with CET1 capital ratio at 14.9% (up 40 bps Q4).
Revenue Growth Drivers
The company's revenue growth was driven by various factors, including a 5% growth in deposit balances, with growth in each of the company's four businesses. The company also grew fee and other income, with Transaction Banking growing 4% and Wealth growing 24%. The Wealth business grew fee and other income by 20% year-on-year to $2.1 billion, driven by all four income areas. As Georges Elhedery stated, "wealth remains a growth opportunity, with a strong presence in Asia and the Middle East, and a better catchment of affluent and high net worth customers."
Strategic Progress and Guidance
The company has made progress on its three strategic priorities: being simple and agile, driving customer centricity, and delivering focused sustainable growth. It has reduced net managing director positions by 15% and expects to deliver $1.5 billion of annualized simplification saves by the first half of 2026. The company guides for 1% cost growth on a target basis for 2026 while reinvesting in the business. The company expects broad-based revenue growth across all businesses in 2026, driven by deposits, Wealth, and Transaction Banking.
Valuation and Dividend Yield
Using the provided valuation metrics, HSBC's Price-to-Tangible Book Value (P/TBV) can be approximated using the 'P/B Ratio' at 1.68. The Dividend Yield is 3.66%. Analysts estimate next year's revenue growth at 3.7%, which is lower than the company's guidance. The current valuation multiples imply that the market has already priced in a certain level of growth and profitability.
Outlook and Challenges
The company is confident in its guidance, with a 5% revenue growth in 2028, and a return on tangible equity of 17% or better, with a 50% dividend payout ratio. However, the company faces challenges, including changes in shopping patterns, with a shift towards food and beverage, and the office sector being closely watched, with vacancy rates still around 17%. The company is being more selective in its customer acquisition, with a focus on affluent customers, and expects slightly slower growth in new-to-bank customers in 2026.