HSBC Raises Profit Goals Despite $4.9B in One-Time Charges

Banking giant HSBC exceeded profit expectations despite facing nearly $5 billion in one-time charges last year. The international bank increased its profitability targets through 2028 after completing major restructuring efforts.

International banking giant HSBC Holdings has increased its profitability expectations after annual earnings exceeded analyst predictions, signaling that the financial institution’s major restructuring efforts are largely complete and positioning for future expansion.

Despite being hit with $4.9 billion in extraordinary charges, Europe’s biggest bank saw pretax earnings decline 7% to $29.9 billion for the year. The results still surpassed consensus predictions by approximately $1 billion, following what was considered an exceptionally strong performance in 2024.

In a company statement, Chief Executive Georges Elhedery noted the bank’s decisive actions over the past year.

“We are becoming a simple, more agile, focused bank built for a fast-changing world,” Elhedery said.

The financial institution announced it was increasing its return on tangible equity goal – a crucial banking profitability metric – to “17% or better” by 2028, an improvement from the previous “mid-teens” objective established for the period ending in 2027. The bank achieved 13.3% in this measure last year.

Following the earnings announcement, HSBC’s Hong Kong-traded stock price jumped 2.5%.

The substantial charges from last year included a $2.1 billion write-down connected to the bank’s stake in China’s Bank of Communications, which suffered from dilution effects and China’s prolonged real estate market decline.

This resulted in the bank’s mainland China operations seeing pretax earnings plummet 66% to $1.1 billion.

Additional costs included $1.4 billion in legal reserves and $1 billion for restructuring and associated expenses.

Since taking the helm 18 months ago, career HSBC executive Elhedery has transformed the organization by restructuring business units along geographical East-West divisions, eliminating smaller-scale investment banking operations in America and Europe, and reducing senior management positions.

The bank completed departures from 11 different business segments worldwide during the previous year.

These transformation efforts contributed to HSBC’s London-traded shares soaring 50% in 2025, with an additional 10% gain year-to-date, bringing the company’s market capitalization to approximately $300 billion.

HSBC completed the acquisition of subsidiary Hang Seng Bank through a $13.7 billion privatization deal last year. The company announced Wednesday that their merged banking operations expect to generate $900 million in pretax revenue and cost efficiencies by 2028’s conclusion, though this will involve $600 million in restructuring expenses.

The bank declared a final dividend payment of 45 cents per share, supplementing the 30 cents distributed earlier in the year. However, this total fell short of the 87 cents paid out for 2024.

Elhedery’s total compensation package reached 6.6 million pounds ($8.9 million) in 2025, representing an 18% increase from the previous year.

Investment analysts from Jefferies suggested that while investors would likely respond positively to the strong financial performance, they might question the bank’s projection of only a 1% cost increase for 2026 given competitive pressures and necessary artificial intelligence technology investments.