London — HSBC reported a 7.4% decline in annual pre-tax profit, even as revenue rose 4% and both figures exceeded market expectations, the bank said Wednesday.
Europe’s largest lender posted pre-tax profit of $29.91 billion for the year, compared with analyst estimates of $28.86 billion. Revenue came in at $68.27 billion, above the $67.36 billion forecast.
Despite the year-on-year drop in profit, the bank’s wealth division and Hong Kong operations delivered strong performances, helping offset other pressures.
In the fourth quarter, HSBC’s profit before tax rose to $6.8 billion, an increase of $4.5 billion from the same period last year. The bank said the rise was largely due to favorable one-off items related to business disposals.
Fourth-quarter revenue climbed 42% year on year to $16.4 billion. However, operating expenses increased 8% to $9.3 billion, reflecting restructuring costs, technology investments and higher performance-related compensation.
Group Chief Executive Georges Elhedery said 2025 marked a year of “decisive action and swift execution,” adding that all four of HSBC’s core businesses showed solid performance and momentum.
HSBC is now targeting a return on average tangible equity (RoTE) of 17% or more between 2026 and 2028, excluding notable items. The bank reported a RoTE of 13.3% in 2025.
The results follow HSBC’s completion of the privatization of Hang Seng Bank on Jan. 26, after which Hang Seng’s shares were delisted from the Hong Kong Stock Exchange. HSBC previously said the deal would enhance earnings and represent a more efficient use of capital than share buybacks.
Morningstar equity analyst Kathy Chan said revenue and cost synergies between HSBC and Hang Seng are expected but will likely materialize gradually over the medium term.
Addressing potential job cuts, Elhedery said HSBC is targeting an approximately 8% reduction in payroll costs but has not set specific headcount reduction targets. He noted a net 15% reduction in managing director roles through the removal of duplicate positions.
Recent reports have suggested that some bankers may receive minimal or no bonuses as HSBC shifts toward a more performance-driven compensation model. The bank has not confirmed final decisions regarding bonuses or workforce reductions.
Shares of HSBC listed in Hong Kong fell 0.46% following the announcement.
