“We are becoming a simple, more agile, focused bank, built on our core strengths”-Georges Elhedery, Group CEO

Georges Elhedery, Group CEO, said:

“We are becoming a simple, more agile, focused bank, built on our core strengths. The intent with which we are executing our strategy is reflected in our performance this quarter, despite taking legal provisions related to historical matters. The positive progress we are making gives us confidence in our ability to upgrade our targets and we now expect 2025 RoTE excluding notable items to be mid-teens, or better. We remain fully focused on helping our customers navigate new economic realities, putting their changing needs at the heart of everything we do.“

Financial performance in 3Q25

• Reported profit before tax of $7.3bn was $1.2bn lower compared with 3Q24. The reduction reflected an increase in operating expenses, mainly from notable items in 3Q25, including legal provisions of $1.4bn. This was partly offset by revenue growth, which included an increase in banking net interest income (‘banking NII‘) and a strong performance in Wealth, while fee and other income fell in Global Foreign Exchange and in Debt and Equity Markets. Profit after tax of $5.5bn was $1.2bn lower than in 3Q24.
• Constant currency profit before tax excluding notable items was $9.1bn, an increase of $0.3bn or 3% compared with 3Q24, as revenue growth, driven by continued strong performance in Wealth, was partly offset by a rise in operating expenses due to planned investment and inflationary impacts.
• Annualised return on average tangible equity (‘RoTE‘) in 3Q25 was 12.3%, compared with 15.5% in 3Q24. Excluding notable items, annualised RoTE in 3Q25 was 16.4%, a rise of 0.5 percentage points compared with 3Q24.
• Revenue increased by $0.8bn or 5% to $17.8bn compared with 3Q24. There was growth in fee and other income in Wealth in our International Wealth and Premier Banking (‘IWPB‘) and Hong Kong business segments, supported by higher customer activity, while fee and other income fell in Global Foreign Exchange and in Debt and Equity Markets in our Corporate and Institutional Banking (‘CIB‘) segment, from reduced client activity amid lower market volatility. The increase also reflected growth in banking NII. Constant currency revenue excluding notable items rose by $0.5bn to $17.9bn.
• Net interest income (‘NII‘) of $8.8bn increased by $1.1bn or 15% compared with 3Q24, which included a benefit from the non-recurrence of a $0.3bn loss in 3Q24 on the early redemption of legacy securities. The rise also reflected deposit growth and the benefit of our structural hedge, partly offset by a reduction of $0.3bn due to the disposal of our business in Argentina. The fall in interest rates reduced the funding costs of the trading book compared with 3Q24 by $0.7bn, resulting in an increase in banking NII of $0.5bn or 4% to $11.0bn.
• Net interest margin (‘NIM’) of 1.57% increased by 11 basis points (‘bps‘) compared with 3Q24, including a benefit from the non-recurrence of a loss on the early redemption of legacy securities in 3Q24, partly offset by the disposal of our business in Argentina. NIM increased by 1bps compared with 2Q25, as a rise in NII was partly offset by an increase in average interest-earning assets (‘AIEA‘).
• Expected credit losses (‘ECL‘) of $1.0bn were stable compared with 3Q24. The charge in 3Q25 primarily related to stage 3 charges on wholesale exposures, including incremental charges related to the Hong Kong commercial real estate (‘CRE‘) sector, a charge against a Middle Eastern exposure and charges against a small number of exposures in our UK business. This was partly offset by releases due to a stabilisation in the macroeconomic outlook during 3Q25. ECL in 3Q24 included charges against exposures in the onshore Hong Kong CRE and mainland China CRE sectors.
• Operating expenses of $10.1bn were $1.9bn or 24% higher compared with 3Q24. The increase reflected notable items, including legal provisions of $1.4bn on historical matters, comprising $1.1bn in connection with developments in a claim in Luxembourg relating to the Madoff securities fraud, and $0.3bn relating to certain historical trading activities in HSBC Bank plc. Notable items also included restructuring and other related costs associated with our organisational simplification of $0.2bn. In addition, there was higher planned spend and investment in technology and the impacts of inflation. These increases were partly offset by the impact of the disposal of our business in Argentina and the benefits of our restructuring activities. Target basis operating expenses were $8.4bn, $0.3bn or 3% higher than in 3Q24.
• Customer lending balances increased by $1.2bn compared with 2Q25, including adverse foreign currency translation differences. On a constant currency basis, lending balances increased by $5.6bn, including growth in commercial customer lending and mortgages in our UK business and an increase in IWPB from Private Bank lending in Hong Kong and Singapore, and mortgage balance growth in Singapore and Australia.
• Customer accounts increased by $18.6bn compared with 2Q25, including adverse foreign currency translation differences. On a constant currency basis, customer accounts increased by $25.5bn, driven by growth in CIB in Asia, Europe, the UK, the Middle East and the US.
• Common equity tier 1 (‘CET1’) capital ratio of 14.5% decreased by 0.1 percentage points compared with 2Q25, driven by a reduction in CET1 capital, which reflected the recognition of $1.4bn of legal provisions in 3Q25, partly offset by a decrease in risk-weighted assets (‘RWAs‘). The decrease in RWAs was mainly driven by a reduction in market risk RWAs, and methodology and policy changes in credit risk RWAs.
• The Board has approved a third interim dividend for 2025 of $0.10 per share. On 24 October, we completed the $3bn share buy-back announced at our interim results on 30 July 2025.

Financial performance in 9M25

• Reported profit before tax decreased by $6.9bn to $23.1bn compared with 9M24, mainly due to an $8.2bn year-on-year impact of notable items, including the non-recurrence of $3.6bn in net gains in 9M24 relating to our disposals in Canada and Argentina, the recognition of dilution and impairment losses in 9M25 of $2.1bn related to our associate Bank of Communications Co., Limited (‘BoCom‘), legal provisions of $1.4bn and restructuring and other related costs associated with our organisational simplification of $0.8bn in 9M25. Profit after tax decreased by $6.5bn to $17.9bn compared with 9M24.
• Constant currency profit before tax excluding notable items was $28.0bn, an increase of $1.2bn or 4% compared with 9M24, as higher revenue from growth in fee and other income in Wealth in our IWPB and Hong Kong businesses, and from Foreign Exchange and Debt and Equity Markets in our CIB business segment, mitigated a rise in ECL and a planned increase in operating expenses.
• Annualised RoTE in 9M25 was 13.9%, compared with 19.3% in 9M24. Excluding notable items, annualised RoTE in 9M25 was 17.6%, a rise of 0.9 percentage points compared with 9M24.
• Revenue decreased by $2.4bn or 4% to $51.9bn compared with 9M24, reflecting the year-on-year impact of notable items, mainly from disposals in Canada and Argentina in 9M24. Excluding notable items revenue increased, primarily due to fee and other income growth in Wealth and in Foreign Exchange and Debt and Equity Markets in CIB. Constant currency revenue excluding notable items rose by $2.4bn to $53.3bn compared with 9M24.
• NII of $25.6bn increased by $1.1bn compared with 9M24, including an adverse impact of $1.5bn from business disposals in Argentina and Canada, partly offset by the favourable impact of the non-recurrence of a $0.3bn loss in 3Q24 on the early redemption of legacy securities. NII growth was driven by the benefit of our structural hedge, an increase in deposits and lower costs of funding, which mitigated the impact of lower market interest rates. The fall in interest rates reduced the funding costs of the trading book by $1.5bn, which resulted in a fall in banking NII of $0.4bn to $32.4bn.
• NIM of 1.57% was stable compared with 9M24, as improved margins in our main markets were offset by the impact of the disposal of our business in Argentina.
• ECL were $2.9bn, an increase of $0.9bn compared with 9M24. The increase included $0.6bn of higher charges related to the Hong Kong CRE sector, which reflected higher allowances for new defaulted exposures, the impact of an over-supply of non-residential properties that has put continued downward pressure on rental and capital values, and updates to our models used for ECL calculations. The increase also included a charge against a Middle Eastern exposure in the third quarter. In 9M24, the ECL charge benefited from allowance releases, mainly in the UK, and from a recovery relating to a single CIB client. Annualised ECL charges were 40bps of average gross loans, including loans and advances classified as held for sale.
• Operating expenses increased by $2.7bn or 11% to $27.1bn compared with 9M24. The increase primarily reflected notable items in 9M25, including legal provisions of $1.4bn, restructuring and other related costs associated with our organisational simplification of $0.8bn, and $0.2bn related to strategic transactions. In addition, there was higher planned spend and investment in technology and the impacts of inflation. These increases were partly offset by reductions related to our business disposals in Canada and Argentina, and the benefits of our organisational simplification. Target basis operating expenses rose by $0.7bn or 3% compared with 9M24, primarily due to higher spend and targeted investment in technology and the impacts of inflation.

Outlook

• We expect to deliver a mid-teens or better RoTE for 2025, excluding notable items. This reflects sustained momentum in the earnings of our four businesses into the third quarter and the positive progress we are making in our strategic execution. Our guidance reflects a seasonally lower RoTE in the fourth quarter, which includes historically lower client activity in Wealth and certain cost items specific to the fourth quarter (e.g. the UK bank levy). It also includes a higher level of capital having announced our intention not to initiate share buy-backs temporarily in the context of our proposal to privatise Hang Seng Bank Limited (‘Hang Seng Bank‘).
• We maintain confidence in our ability to deliver our mid-teens RoTE target, excluding notable items for 2026 and 2027.
• We now expect banking NII of $43bn or better in 2025, reflecting increased confidence in the near-term trajectory for policy rates in key markets, including in Hong Kong and the UK.
• We continue to expect ECL charges as a percentage of average gross loans to be around 40bps in 2025 (including loans held for sale balances).
• Target basis operating expense growth in 2025 compared with 2024 remains at approximately 3%, including the impact of simplification-related saves associated with our announced reorganisation.
• While demand for lending remained muted in 9M25, we continue to expect mid-single digit percentage growth for year-on-year customer lending balances over the medium to long term.
• We continue to expect double-digit percentage average annual growth in fee and other income in Wealth over the medium term.
• We maintain our medium-term CET1 capital ratio target range of 14%–14.5%. The expected day one capital impact of the proposed transaction to privatise Hang Seng Bank is a net reduction of approximately 125 basis points, which would arise following the approval of the relevant resolutions by the requisite majority at each of the Hang Seng Bank Court Meeting and the Hang Seng Bank General Meeting. Having announced our intention not to initiate share buy-backs temporarily, we expect CET1 capital to increase prior to completion of the transaction, and while we may fall below our CET1 capital target range on incurring the expected day one capital impact, we expect to restore our CET1 capital ratio to within our target range through a combination of organic capital generation and the impact of not initiating share buy-backs. A decision to recommence buy-backs will be subject to our normal buy-back considerations and process on a quarterly basis. We maintain our dividend payout ratio target basis of 50% for 2025, excluding material notable items and related impacts.

Our targets and expectations reflect our current outlook for the global macroeconomic environment and market-dependent factors, such as market-implied interest rates (as of mid-October 2025) and rates of foreign exchange, as well as customer behaviour and activity levels.

We do not reconcile our forward guidance on RoTE excluding the impact of notable items, target basis operating expenses, dividend payout ratio target basis or banking NII to their equivalent reported measures.