HSBC profit update: Overhaul Nearing Completion

Published: 25 February 2026. The English Chronicle Desk. The English Chronicle Online.

HSBC has indicated that its extensive bank overhaul is approaching completion despite falling annual HSBC profit figures. The chief executive, Georges Elhedery, who assumed leadership in 2024, described the lender as “becoming a simple, more agile, focused bank built for a fast-changing world,” highlighting strategic clarity after months of restructuring. Investors were watching closely as HSBC posted pre-tax HSBC profit of $29.9bn last year, down 7% from the previous year, reflecting $4.9bn in one-off charges but still exceeding analyst expectations by approximately $1bn.

The bank’s results were tempered by significant exceptional items, including a $2.1bn write-off linked to its stake in China’s Bank of Communications, affected by the prolonged weakness in the local property market. HSBC’s mainland China business suffered a 66% decline in pre-tax HSBC profit to $1.1bn, underlining the challenges of operating in the region amid broader economic headwinds. Additionally, legal provisions of $1.4bn and $1bn of restructuring costs further weighed on HSBC profit, demonstrating the cost of the bank’s ambitious transformation programme.

Despite these challenges, HSBC raised its target for return on tangible equity to “17% or better” through 2028, up from a previous mid-teens target for the three years to 2027. The bank achieved 13.3% last year, signalling progress towards higher profitability metrics and improved HSBC profit. The news was welcomed by the market, with Hong Kong-listed shares rising 2.5% after the announcement, reflecting investor confidence in the bank’s long-term HSBC profit trajectory.

Elhedery, a veteran of HSBC, has overseen a series of sweeping changes since taking the helm. The bank reorganised its operating divisions along east-west lines, divested smaller investment banking units in the US and Europe, and reduced the number of senior managers, a move aimed at improving agility and decision-making. Eleven exits from global businesses were executed in the past year, further streamlining operations and eliminating underperforming segments, supporting long-term HSBC profit growth.

London-listed HSBC shares have seen substantial gains, climbing 50% in 2025 and a further 10% year-to-date, placing the bank’s market value at roughly $300bn. These gains were underpinned by strong operational performance in key areas and strategic clarity on business priorities, positively affecting HSBC profit expectations. Analysts noted that the bank’s market performance reflects both the effectiveness of the management team and the confidence of shareholders in the bank’s future HSBC profit potential.

The bank also completed the acquisition of Hang Seng Bank, taking it private in a $13.7bn deal. HSBC expects combined operations to generate $900m in pre-tax revenue and cost synergies by the end of 2028, although it anticipates $600m in restructuring expenses linked to the integration. This move strengthens HSBC’s footprint in Asia while enhancing operational efficiency across its combined businesses and supporting long-term HSBC profit growth.

Dividend policy remained supportive of shareholders, with HSBC declaring a final dividend of 45 cents per share, on top of 30 cents earlier in the year. While this falls short of the total 87 cents paid in 2024, the bank emphasised the balance between rewarding investors and investing in the transformation of its operations. Elhedery’s total pay for 2025 rose 18% to £6.6m, reflecting the board’s recognition of progress in implementing the strategic overhaul.

Analysts at Jefferies highlighted that investors would likely be pleased with the overall results, but cautioned that the bank’s projected 1% increase in costs for 2026 may prove optimistic. Competitive pressures and the ongoing need for investment in artificial intelligence and digital banking capabilities could challenge the bank’s cost assumptions, suggesting careful scrutiny will be required in the coming year.

The leadership team received a boost in December with the appointment of Brendan Nelson, a former KPMG partner, as chair after an extended search that left the bank without a permanent top executive for several months. Nelson’s appointment is expected to reinforce governance and support the strategic direction under Elhedery’s leadership, providing stability at a crucial time for HSBC.

Georges Elhedery emphasised that the bank’s transformation was not solely financial but cultural, aiming to foster innovation, faster decision-making, and a leaner management structure. He argued that the simplification of operations and refocusing on core business areas would allow HSBC to respond more effectively to market opportunities and regulatory changes across Europe and Asia.

HSBC’s cost-cutting and divestment strategy have been carefully targeted, focusing on underperforming units while maintaining investment in high-growth regions and technology. Analysts have noted that the bank’s disciplined approach to capital allocation and risk management underpins confidence in achieving its 17% return on tangible equity target, supporting future HSBC profit.

The challenges in China remain a key concern for HSBC, particularly in light of ongoing property sector weakness and regulatory scrutiny. Despite these headwinds, the bank is committed to maintaining a strong presence in the region, leveraging its network and expertise to capitalise on recovery opportunities as market conditions evolve.

The integration of Hang Seng Bank is central to HSBC’s Asian strategy, with combined operations expected to deliver efficiencies and stronger market positioning. Management stressed that careful execution of the integration plan would be critical, with a focus on capturing revenue synergies and optimising operational costs without disrupting client services, further protecting HSBC profit.

Investor sentiment has been buoyed by HSBC’s strong share performance and strategic clarity, although attention remains on profitability trends and cost management. Analysts emphasise that while the transformation appears largely complete, monitoring execution against strategic targets and navigating external risks will be vital to sustaining long-term HSBC profit creation.

Looking ahead, HSBC plans to leverage its streamlined structure to pursue growth in areas with the highest return potential, including wealth management, sustainable finance, and technology-driven banking solutions. The bank intends to continue enhancing client experiences while maintaining strict risk discipline, balancing short-term performance with long-term strategic objectives and HSBC profit growth.

Georges Elhedery’s leadership has been widely credited with instilling greater agility and accountability throughout the bank. By reducing complexity and focusing on core operations, HSBC is positioning itself to respond rapidly to market changes, regulatory developments, and emerging financial technologies.

Overall, the bank’s results illustrate the complex interplay between restructuring costs, one-off charges, and ongoing operational improvements. HSBC’s trajectory demonstrates resilience and a strategic commitment to creating a more focused, profitable, and adaptable organisation capable of competing globally in a rapidly evolving financial landscape, ensuring sustainable HSBC profit growth.

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