HSBC (NYSE:HSBC) used its full-year 2025 fixed income investor call to highlight record profitability, continued simplification progress, and a balance sheet it described as highly liquid and capital generative, alongside updated medium-term targets and a detailed 2026 debt issuance plan.
2025 financial performance and business mix
Group Treasurer Faisal Yousaf said results for 2025 were “strong” and showcased the benefits of HSBC’s diversified model. Discussing figures excluding notable items and on a constant-currency basis, Yousaf reported group revenue of $71 billion, up 5% year over year, including $44.1 billion from banking net interest income (NII).
He pointed to several business trends during the year, including:
- Wholesale transaction banking fee and other income up 4% year over year within CIB.
- Wealth fee and other income up 22% in IWPB, with growth “across all subsegments.”
HSBC declared ordinary dividends for the year of $0.75 per share, an increase of 14% on the prior year, according to Yousaf.
Strategic execution: Hang Seng privatization and simplification
Yousaf said the group made “significant progress” during 2025 toward becoming “a simple, more agile, customer-centric bank.” A key development he highlighted was the privatization of Hang Seng Bank, which he said was completed ahead of schedule and strengthened HSBC’s position in Hong Kong.
Yousaf framed Hong Kong as a “super connector” and gateway between mainland China and the rest of the world, and said the transaction “brings together global reach and local depth.” He said initial synergies had already been identified, with “further revenue and cost upside to come,” and added that growth and asset quality improvement were expected to create additional value.
Beyond the Hang Seng deal, Yousaf said HSBC continued to simplify and focus on core markets and businesses. The group announced 11 business exits in 2025, with four completed as of the call. He also said the bank took actions to realize approximately $1.2 billion of annualized simplification savings in 2025, which he described as ahead of the original timeline. He added that delivery of the plan supported guidance for 1% cost growth in 2026 on a target basis.
In Q&A, Alastair Ryan, global head of investor relations, said HSBC plans to run two banks in Hong Kong with full market service. He said the transaction is “not a typical in-market deal,” noting some back offices were already working together due to HSBC’s long-standing controlling stake, and that this dynamic influences the scale and nature of potential cost synergies.
Balance sheet, capital, and asset quality
Yousaf said deposit growth and liquidity remained key strengths. Deposits increased 5% during the year, equivalent to a $78 billion increase (including held-for-sale balances), with particularly strong growth in Hong Kong amid “ongoing capital and wealth inflows.” He added that in HSBC’s two home markets, deposits skewed more toward current and savings accounts than the broader market.
The loan book grew 2%, as growth in the U.K., CIB, and IWPB was partly offset by repayments and muted demand in Hong Kong. Cost of risk was around 39 basis points, in line with guidance of around 40, and the bank’s expectation for 2026 was “around 40 basis points again.”
Stage 3 balances were 2.5% of customer loans, up slightly from 2.4% a year earlier. The overall grading of the loan book improved, with 77% rated strong or good, up 1 percentage point year over year.
On capital, HSBC ended 2025 with a 14.9% CET1 ratio, which Yousaf said was elevated due to organic capital generation and retained capital to support the Hang Seng privatization. He said the transaction closed on Jan. 26 with a $13.7 billion purchase price and that removing a $3.8 billion minority “capital inefficiency” implied about $10 billion of CET1 consumption, reducing CET1 by 110 basis points in January (post balance sheet date). HSBC expects to manage CET1 within a 14%–14.5% operating range.
HSBC’s MREL ratio was 32.9%, described as 4.5 percentage points above requirements, equivalent to about $40 billion of available capital. In Q&A, Greg Case, head of debt investor relations, said the increase in MREL requirements in the second half was driven primarily by some resolution entities being leverage-constrained rather than RWA-constrained, with growth in leverage assets contributing to the higher requirement.
Liquidity metrics included total HQLA of $0.9 trillion against a $1.8 trillion customer deposit base, a group LCR of 137% (using a methodology that excludes $160 billion of HQLA), and entity LCRs with the lowest at 148%. The loan-to-deposit ratio fell to 55%, representing a $0.8 trillion customer surplus.
HSBC’s structural hedge stood at $593 billion, up $64 billion in 2025, with an average life of 3.1 years. Yousaf said HSBC expects to redeploy $110 billion of structural hedge assets currently yielding 2.7%, and reiterated that the hedge remains a tailwind for banking NII.
Updated targets, digital initiatives, and 2026 issuance
Yousaf said HSBC is “announc[ing] improved targets and guidance.” The bank expects revenue growth “rising towards 5% by 2028” (excluding notable items) and is targeting ROTE of 17% or better each year through 2028, also excluding notable items. For 2026, HSBC guided to banking NII of at least $45 billion, citing deposit growth expectations and the structural hedge contribution.
He also discussed investment in digital assets and artificial intelligence. In digital assets, Yousaf said activity remains client-driven and focused on custody, tokenization, and market infrastructure, including work across bonds, gold, and tokenized deposits. He noted HSBC Orion’s recent selection for the U.K. government’s digital gilt mandate and said HSBC Gold tokens in Hong Kong include a gold gifting feature. In Q&A, Yousaf said tokenized deposit clients have been onboarded in Hong Kong and the offering has expanded to the U.K., Singapore, and Luxembourg.
For 2026 issuance, Yousaf provided the following expectations:
- ~$20 billion of holdco senior
- $1 billion of Tier 2
- $4 billion of AT1
He said opco funding needs are expected to be minimal given the funding position. On currency, Yousaf said the bank expects to issue roughly two-thirds to three-quarters of senior holdco in U.S. dollars, with openness to other currencies such as GBP, EUR, SGD, AUD, JPY and others depending on opportunities and the ability to downstream proceeds to relevant legal entities.
Separately, Yousaf said HSBC continues to manage its legacy securities stack. He cited a 2025 tender for certain New York law instruments and said the legacy stack has been reduced from over $14 billion in 2022 by approximately half. He added that HSBC continues to monitor legacy instruments including the “5844s,” but said there is currently no intention to call them.
About HSBC (NYSE:HSBC)
HSBC Holdings plc (NYSE: HSBC) is a multinational banking and financial services organization headquartered in London. It traces its origins to the Hongkong and Shanghai Banking Corporation, founded in 1865 to facilitate trade between Europe and Asia, and has since grown into one of the world’s largest banking groups. The company is publicly listed in multiple markets, including the London Stock Exchange, the Hong Kong Stock Exchange and as an American depositary receipt on the New York Stock Exchange.
HSBC operates a universal banking model, serving retail, commercial, corporate and institutional clients.
