HSBC changes
Pick any two versions below to diff them.
- Price
- $86.37
- Discount category
- Below intrinsic value
- Next earnings
- 2027-02-23
- Next earnings is estimate
- No
- Company name
- HSBC Holdings
- Sector
- Banks
- About
- HSBC Holdings is one of the largest banks in the world, with total assets of $3.4 trillion at September 30, 2026. It has four businesses: Hong Kong, the UK, Corporate and Institutional Banking, and International Wealth and Premier Banking. Its Hong Kong business includes HSBC Hong Kong and Hang Seng Bank, which became a wholly owned subsidiary in January 2026. Revenue was $56.4 billion in the first nine months of 2026. The company is headquartered in London. The NYSE-listed HSBC shares are American Depositary Shares, and each one represents five ordinary shares. It reports in US dollars.
- Thesis
- The market prices HSBC for its dependence on Hong Kong and mainland China and for the risk that lower interest rates reduce its income. The Hong Kong business is a large part of profit, and HSBC still books credit losses on Hong Kong commercial real estate. Net interest income depends on rates and on the reinvestment of its structural hedge. Tension between China and the West can also hurt a bank that connects both. HSBC now earns a high return: the return on tangible equity, without notable items, was 18.8% for the first nine months of 2026. The CET1 ratio was 13.9%, below the target range of 14% to 14.5%. For the gap to close, three things must be true. HSBC must earn a return on tangible equity of 17% or better, without notable items, in 2026, 2027 and 2028, as it targets. Banking net interest income must reach at least $46 billion in 2026 and stay stable when rates fall. The CET1 ratio must return to the target range, helped by an expected Basel 3.1 benefit of 40 to 50 basis points on January 1, 2027, so that share buybacks continue. The 2026 annual results on February 23, 2027 give the next test. If these checks pass, the gap can close over the next one to two years. The main reason it may not close is a large shock in Hong Kong or China, or a fall in interest rates that is faster than expected.
- Risks
- Hong Kong and China exposure. A large part of profit comes from Hong Kong. HSBC booked $0.3 billion of credit losses on Hong Kong commercial real estate in the first nine months of 2026. Political tension between China and the West can also hurt the business. Interest rates. Net interest income was $9.3 billion in 3Q26, about half of revenue. Lower rates in Hong Kong, the UK or the US can lower this income, although the structural hedge slows the effect. Capital. The CET1 ratio of 13.9% at September 30, 2026 was below the 14% to 14.5% target range. If the expected Basel 3.1 benefit is smaller, HSBC can buy back fewer shares. Execution of the restructuring. HSBC is selling or closing businesses in Australia, Malta, Egypt and Singapore insurance, and the CFO leaves the role in 2027. Delays can add costs.
- Balance sheet
- HSBC funds itself mainly with customer deposits. At September 30, 2026, total assets were $3,444.8 billion, customer accounts were $1,836.8 billion and net loans to customers were $1,029.9 billion, so loans were 56.1% of customer accounts. The liquidity coverage ratio was 132%. Capital is the real limit for a bank. The CET1 ratio was 13.9%, down from 14.1% at June 30, 2026, against a target range of 14% to 14.5%. Risk-weighted assets were $922.4 billion, the total capital ratio was 19.2% and the leverage ratio was 4.9%. Total shareholders' equity was $195.9 billion and tangible net asset value per share was $9.41. HSBC expects Basel 3.1 to raise its CET1 ratio by about 40 to 50 basis points on January 1, 2027. The sale of HSBC Life (Singapore) is expected to add up to 15 basis points of CET1 when it completes in the first half of 2027. As of 2026-09-30.
- Checkpoints
- Jan 1, 2027: Basel 3.1 start: CET1 benefit. Pending. Watch: A CET1 benefit of about 40 to 50 basis points, as HSBC expects, passes; a smaller benefit or a capital charge fails. Feb 23, 2027: Annual results 2026: return and capital. Pending. Watch: A 2026 return on tangible equity of 17% or better without notable items, banking NII of at least $46 billion and a CET1 ratio back in the 14% to 14.5% range pass; a missed return target or a lower CET1 ratio fail.
- Recent events
- 2026-10-27: HSBC reported 3Q26 results. Profit before tax rose $2.3 billion, or 32%, to $9.6 billion, mainly because large legal provisions in 3Q25 did not repeat. Revenue rose $0.8 billion to $18.6 billion, and the return on tangible equity was 17.7%. The CET1 ratio fell to 13.9%. HSBC declared a third interim dividend of $0.10 per share and announced a share buyback of up to $1 billion. It kept its 2026 guidance and its targets to 2028. 2026-09-10: HSBC announced that Group CFO Pam Kaur will leave the CFO role in 2027 and take an advisory role. The Board started a search for her successor. 2026-08-04: HSBC reported 2026 interim results. Profit before tax rose 23% to $19.5 billion in the first half. HSBC raised its 2026 banking net interest income guidance to at least $46 billion. 2026-07-31: HSBC agreed to sell its AUD36 billion portfolio of Australian home and personal loans to an entity owned by funds managed by Blackstone affiliates, and to wind down the rest of its retail business in Australia over 18 months. It expects about $0.3 billion of restructuring costs and write-offs. 2026-07-24: HSBC agreed to sell HSBC Life (Singapore) to Allianz for S$2.7 billion. It expects a pre-tax gain of $1.8 billion and completion in the first half of 2027. 2026-02-25: HSBC reported 2025 results and set new targets: a return on tangible equity of 17% or better, without notable items, for 2026, 2027 and 2028, and a dividend payout ratio of 50%. 2026-01-26: HSBC completed the privatisation of Hang Seng Bank, which is now a wholly owned subsidiary. HSBC expects $0.5 billion of yearly revenue and cost synergies by the end of 2028. The deal lowered the CET1 ratio by about 110 basis points in January 2026.