Banking net interest income and its wealth division lagged behind forecasts
HSBC has announced plans for a billion-dollar share buyback despite third-quarter revenues falling short of market forecasts, as banking net interest income and its wealth division both underperformed expectations, reports BritPanorama.
The FTSE 100 lender confirmed it would return $1bn to shareholders via a buyback programme, following a $9.63bn profit for the quarter — broadly in line with the consensus estimate of $9.69bn.
However, revenues disappointed, coming in at $18.6bn for the period, beneath the $18.9bn forecast. The shortfall of over $300m was driven largely by weaker-than-expected banking net interest income, which delivered some $11.6bn — around $247m below projections.
The bank’s wealth division also fell short of expectations, generating $2.7bn in revenue against a consensus forecast of $2.8bn.
Shares in the lender tumbled seven per cent in early trading to 1,269.0p, placing the bank at risk of losing its position as the largest listed company by market capitalisation, as reported by City AM.
HSBC also declared an interim dividend of $0.1 per ordinary share, equivalent to approximately $1.7bn being distributed to investors. Combined with the buyback, total returns for the quarter could reach around $2.7bn.
“Our performance shows that in a more complex world clients continue to turn to us to navigate uncertainty and seize new opportunities. It also reflects consistent execution of our strategic priorities with pace, precision and discipline,” said Georges Elhedery, group chief executive. “As we simplify HSBC, we are creating greater capacity to invest, grow and deliver strong returns for our shareholders.”
Operating costs at the bank fell 12 per cent to $8.8bn, largely owing to the absence of a legal charge that had inflated the previous year’s figures.
HSBC set aside a $1.1bn provision in its third-quarter results in 2025 after a Luxembourg court dismissed the bank’s appeal concerning an investment fraud case linked to the Bernie Madoff scandal. The legal action against the bank centred on allegations that it had failed in its supervisory responsibilities by neglecting to adequately protect or confirm the existence of assets, thereby enabling the fraud to continue.
Just over a year ago, the bank also announced plans to acquire the remaining minority shareholding in Hong Kong’s Hang Seng Bank. The group paid a 30.3 per cent premium on the transaction, stating it would be financed by suspending its buyback programmes, with a resumption of buybacks pledged for August following a strong second-quarter profit surge.
The announcement from HSBC — Europe’s largest lender by market capitalisation — arrives just before Chancellor John Healey delivers his first Budget, in which banks are widely anticipated to face a significant tax crackdown. Healey has encountered intense pressure from Labour’s left wing and trade unions to impose steeper taxes on the sector after the industry recorded substantial profits this year.
A five per cent increase to the UK banking surcharge, which is levied in addition to corporation tax, is anticipated to generate approximately £2bn annually.
This announcement illustrates the shifting dynamics within the banking sector, particularly as regulatory pressures mount. HSBC’s measures reflect both a response to current financial realities and a strategic positioning as it faces intensified scrutiny. The forthcoming budget could further influence the operational landscape for banks across the UK.
