HSBC's Q1 2025 Earnings Call: Unraveling Key Contradictions on Deposits, Cost Savings, and Strategic Outlook

Deposit behavior and strategy in Hong Kong, cost savings and strategic reviews, tariff scenario and revenue impact, deposit beta assumptions, and ring-fencing and operational costs are the key contradictions discussed in HSBC's latest 2025Q1 earnings call.



Strong Financial Performance:
- HSBC reported a strong first quarter with profit before tax up 11% and an annualized return on tangible equity of 18.4%, excluding notable items.
- This growth was driven by momentum in earnings, disciplined execution, and confidence in delivering strategic targets.

Wealth Management Growth:
- HSBC's wealth business experienced its fifth consecutive quarter of double-digit year-on-year growth, with $22 billion of net new invested assets and 300,000 new-to-bank customers in Hong Kong.
- The growth is attributed to strong client activity, high client hedging activity due to elevated volatility, and successful investment in wealth products and distribution channels.

Transaction Banking Performance:
- Transaction banking revenue was up 13% on the previous year's first quarter, driven by a strong FX performance and elevated volatility.
- This growth was supported by substantial volumes in client hedging activity, particularly in the foreign exchange market.

Cost Management:
- HSBC is on track to deliver a 3% cost growth in 2025 compared to 2024, maintaining discipline and progressing with simplification-related cost saves.
- The focus is on strategic cost reallocations and disciplined investments to drive growth across core businesses.

Trade Uncertainty and Strategic Positioning:
- HSBC modeled scenarios to assess potential impacts of trade policy changes, estimating a low single-digit percentage impact on revenues from significant tariff increases.
- Despite uncertainty, the bank remains confident in delivering mid-teens return on tangible equity for 2025-2027, supported by a strong balance sheet and diverse earnings sources.