• Profit Before Tax: Up 11% for the first quarter, excluding notable items.
• Return on Tangible Equity: Annualized 18.4%, excluding notable items.
• Net New Invested Assets: $22 billion, with $16 billion in Asia.
• New-to-Bank Customers: 300,000 in Hong Kong.
• Revenue: $17.7 billion, up $1.1 billion from the previous year, excluding notable items.
• Share Buyback: Up to $3 billion announced.
• Interim Dividend: $0.10 per share.
• Expected Banking NII: Around $42 billion in 2025.
• Wholesale Transaction Banking: Up 13% year-on-year.
• First Quarter ECL Charge: $0.9 billion, including a $150 million provision for economic uncertainty.
• CET1 Ratio: 14.7%.
• Loan Balances: Broadly stable quarter-on-quarter.
• Deposits: Up 6% year-on-year.

• Warning! GuruFocus has detected 2 Warning Sign with HSBC.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HSBC Holdings PLC (NYSE:HSBC) reported a strong first quarter with profit before tax up 11% and an annualized return on tangible equity of 18.4%, excluding notable items.
• The company attracted net new invested assets of $22 billion and 300,000 new-to-bank customers in Hong Kong, marking its fifth consecutive quarter of double-digit growth in wealth.
• HSBC Holdings PLC (NYSE:HSBC) announced a share buyback of up to $3 billion and a $0.10 per share interim dividend, reflecting a focus on capital return to investors.
• The bank's balance sheet remains strong with deposit surpluses in every major currency across all geographies, providing a steady recurring income stream.
• HSBC Holdings PLC (NYSE:HSBC) is on track to deliver cost actions set out in February, including simplification-related cost savings and strategic cost reallocations.

Negative Points

• The external macroeconomic environment is less favorable and more uncertain, with trade policy uncertainty dampening business confidence and constraining investment.
• The bank's consensus downside scenario models a slowdown in global trade and GDP growth due to increased tariffs, potentially leading to incremental ECLs of $0.5 billion.
• Loan growth is expected to remain muted in 2025 due to macroeconomic uncertainty delaying decision-making and CapEx investments.
• The reclassification of the retained French home loan portfolio led to a $1.3 billion pretax loss in the quarter, impacting the CET1 ratio by approximately 0.2 percentage points.
• The bank faces potential dilution from BoCom's share issuance, with an expected accounting impact dilution loss of between $1.2 billion and $1.6 billion.

Q & A Highlights

Q: You mentioned a strategic review of Malta and cost savings targets. Have you identified potential to exceed the $1.5 billion cost savings target? Also, how sustainable is the strength in fees and other income? A: We announced $1.5 billion in cost savings from organizational simplification and are on track to deliver these. We also have $1.5 billion from strategic reallocations. Our primary focus is executing these plans. Regarding fees and other income, while volatility has benefited us, we expect continued strength in wealth and transaction banking, driven by structural growth and competitive advantage. (Georges Elhedery, Group CFO)

Q: Can you elaborate on the plausible downside scenario for tariffs and its impact on revenue? What opportunities might arise from current trade tensions? A: Our trade business covers diverse products and corridors, including intra-regional trade. The downside scenario models significant tariff increases and a global GDP slowdown, estimating a low single-digit revenue impact. We aim to deepen client relationships and gain market share, leveraging our expertise and global presence. (Georges Elhedery, Group CFO)

Q: Have you observed any shifts in customer behavior due to trade tariffs? How committed are you to capital returns amid uncertainty? A: Corporate customers are in a wait-and-see mode, with some CapEx on hold. Personal banking and wealth activities remain strong. We capture customer assets through diversified offerings. We are committed to capital returns, with share buybacks as our preferred method, based on capital generation and needs. (Georges Elhedery, Group CFO)

Q: What is your stance on ring-fencing in the UK, and how does it impact costs and competition? A: We believe ring-fencing is redundant due to enhanced prudential regulations. It increases operational costs and capital inefficiencies, impacting competition. Removing or scaling back ring-fencing could improve customer outcomes and support UK growth. (Georges Elhedery, Group CFO)

Q: How do you view the potential impact of Chinese government stimulus on your downside tariff scenario? What are your expectations for loan growth in 2025? A: We are optimistic about China's economic outlook and potential stimulus measures. Our downside scenario does not factor in these positives. Loan growth remains muted due to macroeconomic uncertainty, but we expect deposit growth to continue, driven by our strong franchise. (Georges Elhedery, Group CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.