HSBC on August 4 reported net earnings for the first six months of the year of $15.3 billion, 23.5% higher than the $12.4 billion in the same period in 2025. Most of the increase stemmed from $2.2 billion of favourable one-off items, including the absence of last year's $2.1 billion writedown on the value of HSBC's stake in China's Bank of Communications.
Net income of 85 cents per share was lower than the consensus of 88 cents per share expected by analysts, per LSEG data. Revenue was $37.7 billion, compared with $34.1 billion in the first half of 2025. Annualised return on common equity for the period was 16.9%, while annualised return on tangible equity was 18.2%.
HSBC shares were down 1.4% at £15.74 by 0845 GMT on August 4.
Disposals and risk-management concerns remain
Other issues are more fully in the bank's wheelhouse. HSBC, last week, decided to exit retail banking in Australia by selling its loan portfolio to Blackstone and closing the deposits franchise in a move that will cost shareholders around $500 million. Yet it's unclear why the bank could not find a buyer. With around $25 billion in both assets and deposits, the unit is around three times the size of Citi's old franchise Down Under, which it sold in 2021 for $880 million; and about three-quarters the heft of insurer Suncorp's bank, which ANZ bought in 2024 for $3.3 billion. Apply a similar sale ratio to HSBC's business and it implies Elhedery left $2.5 billion on the table.
Sure, it's just one of 18 disposals the bank has announced or completed in the past 19 months, but the lack of transparency is concerning. The bank's recent $400 million loss on its private credit loans to an Apollo financing vehicle is another risk-management red flag.
None of these issues undermine the progress Elhedery is making overall. But the banker's enthusiastic fanbase may be in danger of getting carried away.
HSBC's strong half-year results support the rally
What could possibly dim the enthusiasm of fans of Georges Elhedery? Not the earnings for the first half of the year that HSBC's chief executive presented on Tuesday. The global bank's revenue grew almost 11% compared to the same period of 2025 while its return on tangible equity hit an annualised 19.1%, ignoring one-off items, well ahead of the 17% medium-term target Elhedery set earlier this year. The strong showing would appear to justify shareholders' faith in him: the stock has more than doubled since he took the reins two years ago. However, HSBC is starting to look priced for perfection.
Valuation is elevated, but questions are emerging
After a 35% rise this year, better than major rivals including JPMorgan, HSBC shares now trade at some 2.2 times its current tangible net asset value at the end of June - a level it has not reached in more than 15 years. That valuation is justified by HSBC's recent performance, using the back-of-the-envelope industry assumption that the bank's cost of equity is 10%, and suggests investors think such a strong performance is sustainable.
They may well be right. Still, a few wrinkles have started to show that warrant some pause. One is completely out of the $370 billion bank's control: Beijing's decision a couple of months back to crack down on cross-border money flows out of the People's Republic. That's a challenge to HSBC's Hong Kong unit, its largest earnings pool.
On Tuesday, Elhedery said the London-headquartered lender has so far not seen any change in behaviour by customers. Indeed, the number of new accounts opened in the Asian city actually increased in the second quarter. Even so, it's almost certainly too early to know for sure just how stringent Chinese President Xi Jinping's financial enforcers will be.
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