HSBC's 2025 Net Profit Falls Year-on-Year, with Three-Year Growth Targets Announced

On Wednesday, HSBC Holdings PLC announced in a filing to the Hong Kong Stock Exchange that its 2025 net profit fell to $21.1 billion (approximately 16.31 billion Swiss francs), a decrease of around $1.8 billion from $22.9 billion in 2024, representing a year-on-year decline of approximately 7.86%. The profit drop comes at a critical time when the bank is undergoing structural adjustments and implementing cost-cutting initiatives, with its pre-tax profit also falling by $2.4 billion to $29.9 billion.

HSBC stated that the 2025 profit decline was mainly affected by a number of exceptional factors, including related losses arising from its holdings in Bank of Communications, a Chinese-funded bank. Despite the overall pressure on profitability, the bank's core business still demonstrated considerable resilience, which was already reflected in its 2025 third-quarter results.

At the end of October last year, HSBC announced its third-quarter results, which showed a decline in net profit for the quarter, primarily due to the impact of litigation and a court defeat related to the Bernard Madoff case. It is understood that this decade-long litigation stems from the Ponzi scheme orchestrated by Bernard Madoff, and HSBC became involved due to its related fund custody services, with the bank setting aside substantial legal provisions in the third quarter, further dragging down the period's profit. However, notably, HSBC's turnover rose by 5% year-on-year in the quarter, driven mainly by increased client business activity, highlighting the stability of its core operations.

In addition to its performance, HSBC also pursued several strategic initiatives in 2025. In early October last year, the British financial giant proposed to acquire Hong Kong's Hang Seng Bank for $14 billion (approximately 12 billion euros), aiming to privatise Hang Seng Bank and remove its listing status in Hong Kong. According to subsequent developments, the privatisation plan has gained widespread shareholder approval; if all conditions are met smoothly, Hang Seng Bank will become a fully owned subsidiary of HSBC, with an expected market value of $37 billion. The merger will further integrate HSBC's business layout in the Hong Kong market.

Faced with the 2025 performance fluctuations, HSBC's management remains optimistic about future development. Group Chief Executive Officer Georges Elhedery stated that HSBC has raised its development targets, aiming to increase its tangible capital return (excluding exceptional items) to 17% or higher between 2026 and 2028. "We also expect the company's annual turnover to grow over the same period and on the same basis, with the growth rate reaching 5% by 2028," he added.

Industry analysts believe that HSBC's 2025 profit decline was mainly dragged down by exceptional factors, and the growth momentum of its core business has laid the foundation for future development. The three-year growth targets announced this time demonstrate its determination to optimise its business structure and enhance profitability, while the acquisition of Hang Seng Bank will help it further consolidate its layout in the Hong Kong and Asia-Pacific markets and strengthen its core competitiveness. Going forward, with the continuous advancement of structural adjustments and the implementation of various strategies, HSBC's profitability is expected to gradually improve.