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HSBC's Q1 2025 Earnings Call: Unraveling Key Contradictions on Deposits, Cost Savings, and Strategic Outlook
Generated by AI AgentEarnings Decrypt
Tuesday, May 6, 2025 10:34 pm ET1min read
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:
- 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.
Strong Financial Performance:
- 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.
Earnings Decrypt
Discover what executives don't want to reveal in conference calls
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