HSBC profit falls but shares gain on outlook for stronger returns and stable dividends

HSBC Holdings, the largest banking group in Europe and Hong Kong by assets, on Wednesday reported a 7 per cent decline in annual profit, but outlined stronger return goals and a sustainable dividend policy as it looked ahead to 2026 and beyond, with shares rising after the results in a show of investor confidence.Pre-tax profit in 2025 dropped to US$29.9 billion from US$32.3 billion a year earlier, or US$1.21 per share, the lender said in a filing to the Hong Kong stock exchange. The result was higher than analysts’ estimates of US$28.86 billion.The decline had been widely expected by analysts after HSBC set aside US$1.1 billion in the third quarter for potential payouts in lawsuits tied to the Bernard Madoff fraud case, bringing total legal provisions to US$1.4 billion.It also booked US$2.1 billion in dilution and impairment losses related to its associate Bank of Communications, incurred US$1 billion in restructuring costs, and faced rising bad debt from Hong Kong’s weak commercial real estate market.HSBC, which completed a US$14 billion buyout of its subsidiary Hang Seng Bank in January, will pay a final dividend of 45 US cents per share, bringing the payout for the year to 75 US cents. That compared with 87 US cents in 2024 and 61 US cents in 2023.As expected, the bank did not announce any share buy-backs, having indicated that it would suspend them for three quarters when it unveiled the Hang Seng Bank buyout.