HSBC (0005) is expected to announce an over 23 percent decline in pre-tax profit for the first half of the year on Wednesday, partly due to a one-off gain from the sale of its Canada business a year ago.
The lender’s profit before tax for the six months is estimated to drop to between US$15.5 billion (HK$120.9 billion) and US$16.5 billion, representing a 23.6 to 28 percent decrease compared to the same period of last year.
The British bank is expected to keep the second interim dividend unchanged at 10 US cents, and to announce a new share buyback plan ranging from US$2 billion to US$3 billion.
It completed a US$3 billion share repurchase program yesterday.
Adjusted pre-tax profit for the six months is forecasted to be nearly US$18 billion, down by around 0.5 percent year-on-year. The bank’s first-half revenue is estimated to drop by nearly 8 percent, but expected credit losses may surge by over 70 percent to US$1.83 billion.
Morgan Stanley expects HSBC’s revenue from wealth management to remain strong in the second quarter, supported by active market activities in Hong Kong and ongoing demand for foreign exchange and interest rate hedging. However, net interest income, or NII, is expected to come under pressure due to a decline in the Hong Kong interbank offered rates, though it may be partially offset by a higher interest income in the UK, it said.
Morgan Stanley sees the London-based lender recording a 26 percent reduction in pre-tax profit for the June quarter to US$6.6 billion.
JPMorgan Chase also flagged that a lower Hibor could further pressure HSBC’s earnings, citing the average daily one-month Hibor slumped by around 200 basis points in the second quarter from the first one.
The firm cautions that HSBC’s management guidance of US$42 billion in NII for 2025 may be at risk because Hong Kong dollar loans made up 22 percent of the bank’s total loan book in 2024.
Revenue for the June quarter is expected to grow 0.8 percent to US$16.7 billion, but expected credit losses are projected to nearly triple to US$954 million.
HSBC’s subsidiary Hang Seng Bank (0011) is also projected to report a 16 to 22 percent slide in first-half net profit to between HK$7.69 billion and HK$8.3 billion.
HSBC and Hang Seng’s shares have jumped by 33.3 percent and 29.3 percent this year to HK$101.1 and HK$123.5, respectively, compared to a surge of 31 percent in an index tracking Hong Kong-listed lenders’ performance.
Staff reporter
