HSBC Profit Drops From BoCom Impairment
London-headquartered HSBC recorded lower profits in the first six months of the year, due in part to impairment losses related to its associate bank in mainland China.
HSBC’s pre-tax profit fell by around 27 percent year-on-year to $15.8 billion in the first half of 2025, according to the bank’s financial results.
This was primarily attributed to the recognition of $1.1 billion of loss from dilution and $1 billion from impairment related to its associate Bank of Communications (BoCom). Following capital issuance by the mainland lender in June, HSBC’s interest shrank from 19 percent to 16 percent. Nonetheless, the British bank noted that it remains committed to its strategic partnership with BoCom.
Revenues decreased 9 percent to $3.2 billion due to the non-occurrence of $3.6 billion in net gains from the disposals of businesses in Canada and Argentina. Excluding these items, revenue increased due to fee and other income growth. Operating expenses rose 4 percent to $17 billion, driven by restructuring and technology costs.
After tax, profit fell 30 percent to $12.4 billion.
ECL for Hong Kong and Tariffs
Expected credit losses (ECL) increased by $900 million to $1.9 billion from charges related to Hong Kong commercial real estate sector and allowances that reflect macro uncertainty due to geopolitical tensions and higher trade tariffs. For the overall year, the bank expects ECL charges to be around 40 basis points of average gross loans, mainly reflecting Hong Kong property risks.
Despite the challenges, HSBC continues to target mid-teens return on equity from 2025 to 2027, excluding notable items, and it said it is on track to deliver on $1.5 billion of cost savings by 2026, which includes those from the reorganization and simplification of its global business.
«In the first half, we continued to execute our strategy with discipline and each of our four businesses sustained momentum in their earnings with each growing revenue,» commented CEO Georges Elhedery on the Hong Kong, UK, corporate and institutional banking and wealth divisions. «This gives us confidence in our ability to deliver our targets.»
