HSBC Holdings plc (NYSE: HSBC) shares dropped 4.93% to $61.85 as of 12:30 PM EDT after the bank reported a 29% year-on-year decline in Q2 2025 pre-tax profit to $6.3 billion, falling short of analysts’ $7 billion estimate.
The decline was largely driven by a $2.1 billion impairment charge related to the bank’s stake in China’s Bank of Communications (BoCom), following recapitalization efforts by the Chinese government.
Operating expenses in Q2 rose 10% year-on-year to $8.9 billion, driven by severance costs tied to CEO Georges Elhedery’s sweeping restructuring strategy, along with heightened investment in technology. These were only partially offset by cost reductions from previously exited businesses in Canada and Argentina.
Q2 revenue stood at $16.5 billion, flat compared to the same period last year. Excluding one-time gains in 2024, underlying revenue improved thanks to strong performance in wealth management and market trading. Foreign exchange and debt/equity market income saw a boost from market volatility, especially in the Hong Kong segment. Net interest income (NII) dropped slightly to $16.5 billion, with net interest margin narrowing to 1.56%.
Expected credit losses rose to $1.1 billion—up from $0.4 billion in Q2 2024—driven by exposure to Hong Kong’s commercial real estate sector. The bank cited declining rental and capital values, an oversupply of properties, and broader macro uncertainty as reasons for the increased provisions.
Despite the profit decline, HSBC’s wealth and premier banking segment delivered strong results. Revenues climbed 19% in H1 2025, driven by rising trading activity among high-net-worth clients and strength in its insurance business. UK revenues also rose 7% quarter-over-quarter, with lending up $7 billion on a constant currency basis.
HSBC reiterated its target of a mid-teens return on tangible equity (RoTE) through 2027, though it warned that geopolitical tensions and tariff scenarios under a possible Trump administration could push RoTE below target. The bank now expects ECL charges to average 40 basis points for 2025 and flagged muted lending demand for the rest of the year.
$HSBC plans $3 billion stock buyback despite 29% drop in Q2 profit
🗓️ The buyback is to commence shortly and to be completed before its Q3 results
📉 Spot on with share repurchases (esp since June 2023) Reduced outstanding share count by ~11% in the last 7 qtrs! pic.twitter.com/0PFEopr2eC
— InsideArbitrage (@InsideArbitrage) July 30, 2025
The Board approved a second interim dividend of $0.10 per share and announced plans for a $3 billion share buyback to be completed by the Q3 2025 earnings announcement.
The post HSBC Holdings plc ($HSBC) Stock: Q2 Profit Falls 29% Amid Impairment Loss and Restructuring Costs appeared first on CoinCentral.
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