HSBC, Europe's largest lender, experienced a 29% annual drop in profit in the second quarter of the year due to a significant impairment charge linked to its business in China.
The FTSE 100 titan reported a pre-tax profit of $6.3bn (£4.72bn), falling short of analyst predictions of $6.99bn, following a $2.1bn write-down for its stake in China's Bank of Communications, as reported by .
This figure exceeded previous forecasts of a $1.6bn loss, in light of the Bank of Communication's plans to raise up to ¥120bn (£12.5bn) by issuing new shares, which would decrease HSBC's ownership from 19% to 16%.
HSBC shares plummeted nearly five per cent as markets opened to 925.50. Matt Britzman, senior equity analyst at Hargreaves Lansdown, commented: "Another quarter, another messy set of results for HSBC."
He added that "Headline numbers have, once again, been skewed by one-off items, and the 29% drop in second-quarter profit before tax is a poor measure of performance."
However, Britzman noted that the underlying performance was "far more encouraging" with "pre-tax profit coming in comfortably ahead of consensus driven by strong growth in wealth management."
Wealth performs in 'messy quarter'
Despite a challenging quarter, the firm's headline revenue took a nine per cent hit, attributed to the impact of notable items from disposals in Canada and Argentina. Excluding these items, revenue rose $1.9bn to $35.4bn, bolstered by a robust performance in wealth and equity markets.
The bank's international wealth and premier banking division surged 13.2 per cent to exceed $2bn as the institution maintains its central focus on private credit and wealth management.
In London, the bank launched a new wealth centre earlier this year, specifically designed for Premier and private bank clients to engage with relationship managers on an invitation-only basis and receive exceptional, tailored wealth management services.
Operating costs climbed four per cent year-on-year to $17bn, driven by "restructuring and other related costs associated with organisational simplification".
Chief executive Georges Elhedery has outlined ambitious plans to secure $1.5bn in annualised cost reductions by 2027, which has already cost the bank $0.6bn in 2025.
The bank confirmed that its savings initiatives remain "on track."
HSBC maintains º£½ÇÊÓƵ grip
Across the º£½ÇÊÓƵ, the bank delivered a stellar first-half performance.
Britain's largest lender secured $3.6bn for the opening six months of the year, with its º£½ÇÊÓƵ division's profit soaring by over 22 per cent.
Elhedery noted that the bank's loan portfolio expanded four per cent in its domestic market, citing "signs of recovery in lending growth in commercial banking."
HSBC's net interest margin – a vital gauge measuring a bank's lending profitability – declined by five basis points compared with the first half of 2024, with the firm attributing this to an "adverse impact from foreign currency translation."
The company's shares ranked amongst those most severely affected by President Donald Trump's 'Liberation Day' tariff assault, plummeting to lows of 713.20p. The excessive tariffs targeting Asia, where HSBC maintains substantial operations relative to its FTSE 100 contemporaries, pushed the bank into negative territory.
However, as Trump retreated from his combative trade stance, HSBC shares have surged to a 24 per cent gain year-to-date, with the stock breaking an all-time record by closing at 971.60p on Tuesday.
The lender stated it was "well positioned to manage the changes and uncertainties prevalent within the global environment" including tariffs.
"We have modelled a disruptive tariff scenario that includes significant reductions in policy rates, together with broader macroeconomic deterioration."
"While we would expect the direct impact from tariffs to have a relatively modest impact on our revenue, the broader macroeconomic deterioration may see return on tangible equity, excluding notable items, fall outside of our mid-teens targeted range in future years."
