HSBC Holdings (HSBC) Earnings Date & Reports
Established in 1865 in Hong Kong, London-based HSBC is one of the largest banks in the world, with assets of USD 3 trillion and over 40 million customers worldwide... Show more
HSBC is expected to report earnings to rise 406.82% to $2.23 per share on August 04
HSBC Holdings (HSBC) 1Q 2026 Earnings Recap: Profit Dips Amid Higher Credit Losses
Key Takeaways
- HSBC Holdings reported 1Q 2026 profit before tax of $9.4 billion, down 1% from $9.5 billion in 1Q 2025, due to higher expected credit losses (ECL, provisions for potential loan defaults).
- Revenue rose 6% to $18.6 billion, beating consensus estimates around $18.5 billion, driven by strong wealth fees and banking net interest income (NII, the difference between interest earned and paid).
- Annualized return on tangible equity (RoTE, a profitability measure) was 17.3%, or 18.7% excluding notable items, exceeding the 17% medium-term target.
- Banking NII increased to $11.3 billion, up $0.7 billion year-over-year; full-year 2026 guidance raised to around $46 billion.
- First interim dividend of $0.10 per share declared, targeting 50% payout ratio for 2026 excluding notable items.
- Shares fell 4-6% post-earnings, reflecting concerns over elevated ECL and notable charges.
Earnings Context and Why It Matters
HSBC Holdings plc (HSBC), a leading global bank with strong Asia exposure, released its 1Q 2026 earnings on May 5, covering the quarter ended March 31, 2026. This report provides early insights into 2026 performance amid volatile interest rates, geopolitical tensions, and economic uncertainty. Investors watch closely for progress on strategic simplification, wealth growth, and Asia momentum, especially after record 2025 profit before tax of nearly $30 billion. Higher ECL tied to UK fraud and Middle East risks highlights credit challenges, while revenue resilience underscores strengths in high-return businesses like wealth and corporate banking. These results influence dividend sustainability and capital returns in a competitive banking landscape.
HSBC reported profit before tax of $9.4 billion for 1Q 2026, a 1% decline from $9.5 billion in 1Q 2025, missing analyst expectations of around $9.6 billion. The drop stemmed from a $1.3 billion ECL charge (up 49% year-over-year, including $400 million UK fraud and $300 million Middle East provisions) and 3% higher target-basis operating expenses at $8.5 billion excluding notables. Revenue hit $18.6 billion, up 6% reported (2% constant currency), surpassing consensus of $18.5 billion, fueled by $8.9 billion NII (up 8%) and robust fee income.
Excluding notable items ($0.7 billion charges from disposals like Malta and UK life insurance), profit before tax was stable at $10.1 billion and revenue $19.1 billion (up 4% constant currency). Basic EPS rose to $0.41 from $0.39, with RoTE at 17.3% (18.7% excluding notables). All four core segments—Hong Kong, UK, Corporate and Institutional Banking (CIB), International Wealth and Premier Banking (IWPB)—grew revenue, with RoTE over 17% excluding notables. Wealth balances reached $1.6 trillion, net new money $39 billion. CET1 ratio (a key capital strength measure) stood at 14.0%.
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Market Reaction and Investor Sentiment
HSBC shares dropped 4-6% following the earnings release, with the FTSE 100-listed HSBA leading declines and the NYSE ADR (HSBC) falling nearly 2% pre-market to around $90. The sell-off reflected disappointment over the profit miss, elevated ECL, and notable charges, overshadowing revenue strength and upbeat NII guidance. Sentiment turned cautious amid credit risks, though analysts like BofA retained Buy ratings, citing positive trends in wealth and deposits. Options implied modest volatility, aligning with historical mixed reactions.
Forward Outlook and Key Factors to Monitor
HSBC reaffirmed confidence in its medium-term targets, including RoTE of 17% or better through 2028 (excluding notable items), 5% annual revenue growth by 2028, and CET1 within 14.0-14.5%. The bank raised full-year 2026 banking NII guidance to around $46 billion from at least $45 billion, citing improved rate outlook despite volatility.
ECL guidance increased to ~45 basis points (bps) of average gross loans (from ~40 bps), incorporating uncertainty from Middle East tensions and fraud; medium-term range remains 30-40 bps. Target-basis operating expenses are expected to grow ~1% versus 2025, supported by $1.5 billion annualised savings from reorganisation by year-end and ongoing simplification (11 strategic exits announced in 2025).
Investors should track Q2 NII trajectory, ECL trends (especially CIB and emerging markets), wealth net new money, and deposit growth ($1.8 trillion at quarter-end). Upcoming catalysts include Hang Seng Bank privatisation impacts, Asia synergies, and August 4 2Q earnings. Geopolitical risks and rate paths remain pivotal.
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