ii view: HSBC – a core dividend stock and China play

Full year results to 31 December

• Revenue up 4% to $68.3 billion (£51.2 billion)
• Pre-tax profit down 2.4% to $29.9 billion
• Capital cushion, or CET1 ratio of 14.9%, unchanged from 2024
• Adjusted Return on Tangible Equity (ROTE) of 17.2%, up from 15.6% 
• Fourth interim dividend of $0.45 per share
• Total ordinary dividend payment for 2025 up 14% to $0.75 per share
• Total 2025 share buybacks of $6 billion

Guidance:

• Now targeting year-on-year growth in revenue from 2026 to 2028, rising to 5% growth in 2028 from 2027 excluding notable items and on a constant currency basis
• Now targeting adjusted ROTE of 17% or better for 2026, 2027 and 2028

Chief executive Georges Elhedery said:

“We are becoming a simple, more agile, focused bank, one that moves with the speed our customers need to navigate the modern world. We are delivering growth, investing for growth and we are executing our strategy with discipline and precision. That gives us confidence in our ability to continue delivering for our shareholders."

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ii round-up:

HSBC Holdings (LSE:HSBA) serves around 41 million customers across more than 50 countries and territories worldwide. 

The UK headquartered bank operates across four divisions. Corporate and Institutional Banking generated most profit during 2025 at 35%. That was followed by the Hong Kong division at 30%, the UK business 21% and International Wealth and Premier Banking the balance of 14%.

For a round-up of these latest results announced on the 25 February, please click here.

ii view:

Started more than 160 years ago, HSBC is today one of the world’s largest banking and financial services organisations. During 2025, the bank processed around $500 trillion of payment transactions in 130 currencies, equivalent to almost $1 billion every minute. A stock market value of £206 billion stands comfortably ahead of UK rivals Lloyds Banking Group (LSE:LLOY), Barclays (LSE:BARC) and NatWest Group (LSE:NWG) all at under £60 billion.  

For investors, geopolitical challenges now include a war in the Middle East, potentially hindering loan demand and even raising debt defaults. Political tensions between China and the USA persist, with tariff negotiations yet to be concluded. A cost:income ratio of 53.4% for 2025 has deteriorated from 50.2% in 2024, suggesting broadly rising costs, while an estimated price-to-net asset value of 1.4 times compares to around 0.8 times for rivals Barclays and Citigroup Inc (NYSE:C), suggesting potentially better value elsewhere.   

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On the upside, exposure to the world’s second-largest economy, China, via the Hong Kong business is considerable and unrivalled by other UK listed banks. Targets including those for revenues and efficiency via Return on Tangible Equity are being pursued. Investments for growth include new Wealth Centres for customers across key markets, while HSBC’s balance sheet remains robust with the capital cushion, or CET1 ratio of 14.9% sat above management’s medium-term target range of 14-14.5%.

On balance, and despite continuing risks, a consensus analyst fair value estimate just above £13 per share, plus a forecast dividend yield of around 5% will likely keep investors interested in this Asia-focused bank.

Positives: 

• Robust balance sheet
• Attractive dividend yield (not guaranteed)

Negatives:

• Uncertain economic outlook
• Heightened political tensions between the West and China

The average rating of stock market analysts:

Strong hold